Technical Update
Presented by Chris Ray
Partner - KPMG LLP
KPMG LLP
GASB Statement No. 43
Financial Reporting for Postemployment Benefit Plans and
Other Than Pension Plans
Annual Revenues
Effective Date

> $100 million

Fiscal Year 2007

> $10 million and
< $100 million

Fiscal Year 2008

< $10 million

Fiscal Year 2009
2
May 2007
GAAP Reporting Workshop
GASB Statement No. 45
Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions
Effective: Fiscal Year 2008

Establishes standards for the measurement,
recognition, and display of other postemployment
benefits (OPEB) expense/expenditures and related
liabilities (assets), note disclosures, and, if applicable,
required supplementary information (RSI)

Required to measure and disclose an amount for
annual OPEB cost on the accrual basis of accounting
3
May 2007
GAAP Reporting Workshop
GASB Statement No. 47
Accounting for Termination Benefits
Effective: Fiscal Year 2006 / 2008

Establishes accounting standards for termination
benefits

Distinguishes between voluntary and involuntary
termination benefits

Voluntary termination benefits:


Inducements to hasten the termination of services

For example, early retirement incentives
Involuntary termination benefits:


Benefits provided as a consequence of the early
termination of services
For example, severance pay
4
May 2007
GAAP Reporting Workshop
GASB Statement No. 47 - continued
Recognition – Accrual Based Statements

Voluntary termination benefits:


Recognize liability and expense when the employees
accept the offer and amounts can be estimated
Measurement of the liability should be updated, and any
incremental liability should be recognized as of the end of
each subsequent reporting period
5
May 2007
GAAP Reporting Workshop
GASB Statement No. 47 - continued
Recognition – Accrual Based Statements

Involuntary termination benefits:

Recognize liability and expense when:

Plan of termination has been approved by those with
the authority to commit the employer to the plan

The plan has been communicated to the employees

Amounts can be estimated

Measurement of the liability should be updated, and any
incremental liability should be recognized as of the end of
each subsequent reporting period

If employee must render future service to receive
termination benefit, recognize benefit over future service
period
6
May 2007
GAAP Reporting Workshop
GASB Statement No. 48
Sales and Pledges of Receivables and Future Revenues
and Intra-Entity Transfers of Assets and Future Revenues
Effective: Fiscal Year 2008

Transaction is presumed to be a collateralized
borrowing unless the specified criteria is met (¶ 6-9)

Provides guidance for transfers of assets or future
revenues within the same reporting entity

Provides guidance on pledges of future revenues when
resources are not received by the pledging government

Guidance provided on recording transactions for
entities outside the government’s reporting entity and
for entities that re part of the government’s reporting
entity
7
May 2007
GAAP Reporting Workshop
GASB Statement No. 49
Accounting and Financial Reporting for Pollution
Remediation Obligations
Effective: Fiscal Year 2009
 Statement
49 requires recognition of a pollution
remediation obligation when one of five specified
obligating events occurs
 Obligations
should be measured using the
expected cash flow technique
 Obligation
may be measured and recognized in
components
 Certain
outlays may be capitalized in accrualbased financial statements
 Guidance
is provided on accounting for expected
recoveries
8
May 2007
GAAP Reporting Workshop
Statement on Auditing Standards No. 112
Communicating Internal Control Related Matters Identified
in an Audit
Effective: Fiscal Year 2007
 SAS
No. 112 does not change the scope of a
GAAS audit. The auditor is not required to design
an audit to identify control deficiencies. Instead,
we evaluate control deficiencies. SAS No. 112 is
relevant when the auditor, in the performance of
the audit, becomes AWARE of deficiencies.
 Non
GAAP Accounting Policies
 Refer
to Chapter 8, Section 8.9
9
May 2007
GAAP Reporting Workshop
Other Projects
 Statements
expected to be issued in 2007:

Pension Disclosures

Intangible Assets (including computer software)

Elements Concept Statement

Land and Other Real Estate Held as Investments by
Endowments
 Statements
expected to be issued in 2008:

Derivatives and Hedging

Fund Balance Reporting and Governmental Fund
Definitions
10
May 2007
GAAP Reporting Workshop
Questions?
11
May 2007
GAAP Reporting Workshop