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On Friday, August 25, I will be testifying before the Governmental Accounting Standards Board (GASB) who sets Generally Accepted Accounting Principles (GAAP) for state and local governments. I will be providing our verbal response to GASB’s Invitation to Comment (ITC) on Pension Accounting and Financial Reporting.
I will be discussing the following issues in relation to state and local governments’ accounting:
• Whether the amounts that are disclosed deep in governments’ financial reports as “Unfunded Actuarial Accrued Liability” should be reported as a “liability” on the balance sheet?
• GASB notes that inter-period equity is important part of accountability. To analysis inter-period equity the readers of financial reports need to be able to determine whether the current governmental officials have paid for the expenses incurred during the current period or whether incurred expense have been passed into future periods. In their ITC after this discussion of inter-period equity, GASB ask whether governments should report incurred benefits as expenses in the period they are earned or when the benefits will be paid.
I would appreciate your thoughts on these issues. Your voices are needed.
The ITC is intended to obtain feedback from constituents at an early stage of the Board’s reexamination of its pension accounting and financial reporting standards.
You can read the Institute for Truth in Accounting’s response by clicking here.
A five page overview of the issues involved can be found at:
http://gasb.org/plain-language_documents/Pension_ITC_PLA.pdf
The Board has also prepared a 35 page Plain Language Supplement, written using a minimum of technical terminology, that describes in more detail the issues involved and poses specific questions the Board is considering. This document can be found at:
http://gasb.org/plain-language_documents/pensionaccountingandfinancialreporting_plain-language.pdf
The full Invitation for Comments can be found at:
http://gasb.org/exp/itc_pension_accounting_and_financial_reporting.pdf
