Government Insights - GASB Statement No. 82

Government Insights GASB Statement

No. 82

GASB Statement No. 82 addresses pension issues arising from other statements PENSIONS PRESENT SUBSTANTIAL ongoing financial obligations to state and local governments, but questions arose in applying recentlyreleased Governmental Accounting Standards Board (GASB) statements to various pension scenarios and financial reporting concerns.

In response, the GASB issued Statement No. 82 – Pension Issues – in March 2016 to address issues raised by GASB Statement Nos. 67, 68 and 73.

Statement No. 82 applies to employee pensions provided by state or local governmental employers, including pensions administered through trusts, as specified in paragraph 3 of Statement No. 67.

Financial statements presented as stand-alone financial reports must align with Statement No. 82 provisions, as must financial statements included in another government’s financial reports.

Effective Date STATEMENT NO. 82 takes effect for reporting periods beginning after June 15, 2016, except for situations in which employer liability is not measured at the end of the most recent fiscal year. In such cases, the effective date is June 15, 2017. Paragraph 7 provides details regarding that exception. The GASB encourages earlier application.

Anticipated Improvements STATEMENT NO. 82 improves consistency in applying accounting and financial reporting requirements, thereby making related financial statements more useful and valuable for stakeholders.

Issues Addressed by Statement No. 82 STATEMENT NO. 82 addresses three major issues: • Presentation of covered payroll in supplementary information: Statement No. 82 amends Statement No. 67 and Statement No. 68 by requiring presentation of covered payroll – the payroll on which pension plan contributions are based – in supplementary information.

Statement No. 67 and Statement No. 68 previously required presentation of covered-employee payroll, which was defined as the payroll of employees receiving pensions through the plan.

Government Insights: GASB Statement No. 82

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• Assumptions: Statement No. 82 clarifies that deviation, as defined by the Actuarial Standard of Practice, does not conform to Statement No. 67, Statement No. 68 or Statement No. 73 requirements for determining total pension liability and related measures.

• Classification of employer-employee contributions: Statement No. 82 clarifies that for purposes of satisfying Statement No. 67 requirements, employer payments made to satisfy contribution requirements should be classified as “plan member contributions,” rather than “plan member contribution requirements.” For satisfying Statement No. 68 requirements, those payments must be termed “employee contributions.” Statement No. 82 also requires that employer expense and expenditures for those amounts be recognized in the same period the contribution is assessed, and in the same manner as similar forms of compensation, such as salary, wages or fringe benefits.

Sara Dempsey, Partner Assurance Services sara.dempsey@weaver.com

Summary PENSIONS REPRESENT a substantial government financial obligation.

With the issuance of Statement No. 82, the GASB addresses concerns raised in applying recently-released statements regarding pensions, thereby enabling governments to present more consistent and comparable information. Statement No. 82 takes effect in most cases for reporting periods beginning after June 15, 2016.

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