Magazine article Government Finance Review

GFOA Urges GASB to Delay Implementation of GASB Statement No. 68

Magazine article Government Finance Review

GFOA Urges GASB to Delay Implementation of GASB Statement No. 68

Article excerpt

In June 2012, the Governmental Accounting Standards Board issued GASB Statement No. 68, Accounting and Financial Reporting for Pensions, which fundamentally changes accounting and financial reporting for state and local government employers. The new standard is scheduled to take effect for the fiscal period that ends June 30, 2015.

GASB Statement No. 68 will require state and local governments that offer defined benefit pensions to report a net pension liability and related accounts in their financial statements for the first time. For most governments in this situation, the amounts reported will be substantial. Accordingly, the independent auditors of such governments will need to obtain reasonable assurance of the reliability of those amounts in order to give an unmodified ("clean") opinion on the employer governments' financial statements.

A unique aspect of public-sector pensions is the existence of independently governed, managed, and audited pension plans. Thus, under GASB Statement No. 68, an employer's independent auditor will have to obtain adequate evidence to support an opinion on information produced by an independent organization. This requirement is especially challenging for auditors of governments that participate in multiple-employer pension plans that may administer up to several thousand plans. Unfortunately, the necessary authoritative auditing guidance to coordinate audit procedures between the plan and the employers' independent auditors has not yet been provided, making it all but impossible for employer auditors to obtain the assurance they need regarding pension-related amounts in time for the audit of the first financial statements prepared in conformity with GASB Statement No. 68. Consequently, unless the effective date of GASB Statement No. 68 is deferred, governments in multiple-employer pension plans can expect to receive a modified opinion on the fair presentation of their financial statements, through no fault of their own or of their independent auditor. Moreover, the threat of a modified opinion could also result in governments significantly delaying the issuance of their financial statements as they seek solutions, consider ramifications (for example, continuing disclosure requirements, disqualification from "low-risk auditee" status for purposes of the Federal Single Audit), or set times to brief elected bodies prior to issuance. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.