According to a GASB announcement, the document will clarify that the use of actual known amounts for purposes of calculating the annual required contribution (ARC) adjustment relating to pensions and other postemployment benefits (OPEB) is consistent with the intent of existing standards. The Board said it encourages use of the known amount in place of the estimation procedure in GASB Statements No. 27, “Accounting for Pensions by State and Local Governmental Employers,” and No. 45, “Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.”
The GASB explained that for accounting purposes, the portion of the ARC calculation related to past over- and underpayments already has been recognized in the financial statements, and an adjustment needs to be made to future ARCs to avoid counting that amount twice. Statements 27 and 45 assume that the amount is not known and therefore prescribe a method of estimation that governments are required to use.
However, it has come to the GASB’s attention that some actuaries do track that portion of the ARC separately. “We want to accommodate the use of actual numbers when governments have them.” said Robert H. Attmore, chairman of the GASB, in the announcement.
The proposed Technical Bulletin may be downloaded free of charge through the GASB Web site at http://www.gasb.org/exp . The comment deadline is September 30.