New GASB accounting standards on the way

The Governmental Accounting Standards Board (GASB) has approved the release of two exposure drafts related to accounting for Other Postemployment Benefits (OPEB).

These changes, first proposed in late May by the Government Accounting Standards Board, seek to significantly increase reporting requirements for employers for “other postemployment benefits,” were recently made available to the general public, according to a report from the agency. Specifically, the proposed standard would require state and local governments to recognize net OPEB liabilities directly in their financial statements, as a means of more effectively disclosing exactly what these benefits are meant to provide them.

GASB chairman David Vaudt noted that these perks, which primarily relate to health insurance and related benefits, often cost government agencies huge amounts of money in theory, but the problem is that these organizations often don't set aside the actual funds to cover those costs, the report said. As a consequence, this kind of disclosure may allow taxpayers, legislators, and other government employees, among many others, to better understand the benefits, and costs associated with them. That information, therefore, could allow them to make more informed choices going forward.

What else is changing?
In addition, the proposed changes to the current standard would require governments to change the way in which they calculate their OPEB liabilities overall, the report said. That would include the long-term rate of return on assets administered through trusts, 20-year tax-exempt high-quality general obligation municipal bond yield or index rate. In addition, the proposed standard would also introduce a single actuarial method for cost allocation, recognize more parts of OPEB expenses, and require governments regardless of OPEB plan type to provide more information about notes and liabilities.