The Governmental Accounting Standards Board (GASB) issued a proposed statement that it says would increase consistency and comparability related to the reporting of fiduciary component units in circumstances in which the organization does not have a governing board and the primary government performs the duties that a governing board typically performs.
The GASB explains that, in certain instances, a legally separate organization does not have a governing board. For purposes of determining whether a primary government is financially accountable for a potential component unit—except for a potential component unit that is a defined contribution (DC) pension plan, a defined contribution other postemployment benefit (OPEB) plan, or another employee benefit plan—if the primary government performs the duties that a governing board typically performs, the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board.
The Exposure Draft, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, is designed to mitigate financial reporting costs associated with certain defined contribution pension plans, defined contribution OPEB plans and other employee benefit plans.
The GASB says the proposed statement also would enhance the relevance, consistency and comparability of accounting and financial reporting for Section 457 deferred compensation plans that meet the definition of a pension plan and for benefits provided through those plans. In addition, it would supersede the remaining provisions of Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, as amended, for all Section 457 plans.
Specifically, the Exposure Draft says a Section 457 plan that meets the definition of a pension plan in paragraph 51 of Statement 67 or paragraph 128 of Statement No. 73 is a pension plan for accounting and financial reporting purposes, including for purposes of determining whether that Section 457 plan should be reported as a fiduciary activity in accordance with Statement 84, as amended. If a Section 457 plan that meets the definition of a pension plan is included in the financial statements of another government or issues stand-alone financial statements, all accounting and financial reporting requirements that are relevant to pension plans should be applied.
For example, an employer or a non-employer contributing entity should apply the requirements of Statement No. 68, Accounting and Financial Reporting for Pensions, as amended, or Statement 73, as amended, to such benefits, as appropriate. The requirements that are applied should be based on the specific type of benefits that are provided through the Section 457 plan, for example, defined contribution pensions.
The GASB is requesting comments about the Exposure Draft.
You Might Also Like:
« Teva Pharma Argues DC Plan Fiduciaries Acted Prudently