GASB Releases Govt. Terminating Worker Benefits Proposal

>A news release said that the draft, Accounting for Termination Benefits, would establish guidance for benefits such as early-retirement incentives and severance benefits that are provided as the result of voluntary or involuntary terminations and is intended to enhance comparability of financial statements by requiring governments to account for similar termination benefits in the same manner.

>The proposed statement would require employers to recognize, in financial statements prepared on the accrual basis of accounting, the cost of voluntary termination benefits when the offer is accepted and the cost of involuntary termination benefits when a plan of termination has been approved and communicated to the employees.

>In addition, the proposal would establish measurement and disclosure requirements for termination benefits. If enacted, the proposed standards would become effective in two parts. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of the proposed statement would be required to be implemented simultaneously with the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. For all other termination benefits, the proposed statement would be effective for financial statements for periods beginning after June 15, 2005.

>The deadline for submitting comments is March 11, 2005. The draft is at http://www.gasb.org/exp/ed_termination_benefits.pdf .