Spring 2007 issue of Horizons

INDUSTRy u

PUBLIC SECTOR

Governmental Accounting Standards Board Statement No. 50 “Pension Disclosures - an amendment of GASB Statements No. 25 and No. 27”

In May 2007, the GASB issued its latest statement, State- ment No. 50, “Pension Disclosures—an amendment of GASB Statements No. 25 and No. 27.” The intent of the statement is to more closely align the financial reporting re- quirements for pensions with those for other post-employ- ment benefits (OPEB). The reporting changes required by this statement amend applicable note disclosure and Regional Supplementary Information requirements of the pension standards as they exist today. The GASB felt that the pension disclosure changes were needed to: (1) enhance accountability related to pension plans and obligations; (2) provide consistency with similar OPEBdisclosures; and (3) improve thedecisionusefulness of financial information provided to citizens, elected representatives, investors and other financial statement users about pensions and pension obligations. As mentioned above, this statement amends Statements 25 and 27 and requires defined benefit pension plans and sole and agent employers to present the following note disclosures or RSI: • Disclosure of the current funded status of the plan as of the most recent actuarial valuation date in the notes to the financial statements of pension plans and certain employer governments to be presented in addition to funded status data currently presented as required supplementary information.

• Disclosure by governments that use the aggregate actuarial cost method of the funded status of the plan and presentation of a multi-year schedule of funding progress using the entry age actuarial cost method as a surrogate; governments currently using the aggregate actuarial cost method are not required to provide this information. • Additional note disclosures about actuarial methods and assumptions used in the valuations underlying information reported about the annual required contribution and funded status of the pension plan. • Requires defined benefit pension plans and defined contribution plans to disclose in the notes to financial statements the methods and assumptions used to determine the fair value of investments, if the fair value is based on other than quoted market prices. • Requires cost-sharing employers to include in the note disclosure of the required contribution rates of the employer(s) in dollars and the percentage of that amount contributed for the current year and each of the two preceding years, how the contractually required contribution rate is determined (for example, by statute or by contract, or on an actuarially-determined basis), or that the cost-sharing plan is financed on a pay-as- you-go basis.

31 u summer 2007 issue