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Measurement Date Clarity Requested for Reporting Pension Liabilities

As state and local governments prepare financial reports for their pension plans to comply with Government Accounting Standards Board (“GASB”) Statement No. 67, Financial Reporting for Pension Plans—an amendment of GASB Statement No. 25, and No. 68, Accounting and Financial Reporting for Pensions, several accountants are still confused which measurement date to use for recording liabilities. The issue was a hot topic among attendees at this week’s Government Accounting and Auditing Update Conference, attended by Cherry Bekaert Partner Patricia Pryor.

Discussing the matter, conference attendee Jeff Markert remarked that state and local governments are confused about which date to use because the actuaries plans employed don’t always offer measurements on the date statements are prepared. As a result, state and local governments can’t move forward in meeting GASB’s reporting requirements unless the measurement date is defined. In Markert’s view, the measurement date usually coincides with the plan’s year-end, and that liability should be assessed as of that plan’s year-end date.

Responding to the ongoing confusion, GASB project manager Michelle Czerkawski said that employers should report a measurement date no earlier than their previous fiscal year’s end for every defined-benefit pension plan they participate in. Additionally, Czerkawski noted net pension liability matches the pension plan’s total pension liability, minus the fiduciary net position.

Under GASB’s previous pension reporting requirements, the asset value used to compute funded status could be evened out over a five-year period, which curtailed a fund’s instability since market fluctuations were not instantly reflected. Per the new requirements, however, the plan assets’ fair market value decides the funded status on the balance sheet.

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