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GASB Approves Two New Financial Reporting Standards
The Governmental Accounting Standards Board (GASB) has approved two new accounting and financial reporting standards for public pension plans. GASB establishes standards to be used by governmental entities in their accounting practices and preparing financial statements. It is the official source of Generally Accepted Accounting Principles (GAAP) for state and local governments.
It is important to note that these changes only affect the accounting standards and do not change funding-related guidelines or practices.
GASB Statement 67 changes the method public pension plans use to calculate and report the costs and obligations of the plans. This new statement replaces the requirements of Statements No. 25 and 50 and primarily affects KPERS directly.
GASB Statement 68 requires governmental employers using GASB standards to report in their financial statements their share of the costs and obligations for the governmental pension plans provided to their employees. In Kansas, this only affects employers using Generally Accepted Accounting Principles (GAAP). Employers that do not use these standards are not affected. Employers may want to consult their independent auditors.
Both statements and plain language descriptions will be available on GASB’s website in early August 2012.
Once GASB releases the standards in August, we’ll have a better understanding of the coming changes and can begin developing information for employers. GASB is responsible for the standards. KPERS is here to provide support for employers. Employers are responsible for determining what applies to them for their financial statements and what accounting standards they use.