GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date,” eliminates a potential source of understatement of restated beginning net positions and expenses in a government’s first year of implementing GASB Statement No. 68, “Accounting and Financial Reporting for Pensions” (see “GASB Approves New Pension Reporting Standards”).
To correct this potential understatement, Statement No. 71 requires a state or local government, when transitioning to the new pension standards, to recognize a beginning deferred outflow of resources for its pension contributions made during the time between the measurement date of the beginning net pension liability and the beginning of the initial fiscal year of implementation.
According to the statement, this amount must be recognized regardless of whether it is practical to determine the beginning amounts of all other deferred outflows of resources and deferred inflows of resources related to pensions.
The provisions are effective simultaneously with the provisions of Statement No. 68, which is required to be applied in fiscal years beginning after June 15, 2014.
The GASB is an independent, nonprofit organization that establishes and improves financial accounting and reporting standards for state and local governments.
More information Statements No. 68 and No. 71 can be found on the GASB website.