GASB 68 From the Employer’s
Perspective
Laura Self, Manager
Columbia, South Carolina
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This material was used by Elliott Davis Decosimo during an oral
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presentation is for informational purposes and does not contain or convey
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• Objectives
- Provide An Illustration of GASB 68 Implementation
- Review Employer Implementation Considerations
- Review Disclosure Requirements
- Review Resources and Guidance Available
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• Example of first year implementation steps
- Using data for Clemson University (30300)
- Most recent PEBA data (unaudited) is used
• Can be found at
http://www.retirement.sc.gov/gasb/employers.htm
- Assumption made for FY 2015 retirement
contributions
- Applicable pages from PEBA follow – SCRS, PORS and
FY 2014 contributions
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• Illustration (Using Clemson University Data)
- Data obtained from PEBA:
NPL
NPL
Change
Def Out
Def In
Net
Pension
FY 14
6/30/2013
6/30/2014
FY13 to FY14
Liab Exp
Invest Exp
Def Out/In
Expense
Contributions
SCRS
466,538,633
447,817,506
18,721,127
25,065,017
31,386,916
25,031,158
6,355,758
PORS
5,543,730
5,119,734
423,996
136,623
592,391
455,768
447,913
412,998
34,915
472,082,363
452,937,240
19,145,123
12,825,887
38,346,672
25,520,785
31,834,829
25,444,156
6,390,673
12,689,264 37,754,281
Difference
- ***Note: Represents all actual ER contributions made in FY14 including service purchases
(amount may vary slightly from amount presented in “Employer Contributions” schedule
presented by PEBA in prior page attachment). PEBA will provide this amount on the final, audited
NPL worksheet.
- Estimated FY 2015 contributions of $26,207,480
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• Illustration (continued)
- Journal Entries – Year 1
DR
A
Unrestricted Net Position
CR
472,082,363
Net Pension Liability
472,082,363
To record beginning pension liability at 6/30/14 (NOTE: measurement date of
beginning pension liability is 6/30/13)
B
Net Pension Liability***
25,459,168
Unrestricted Net Position
25,459,168
To reclass contributions made during the measurement period
(actual FY14 contributions which were recognized as an expense in FY14)
C
Deferred Outflow
Pension Expense
To record/reclassify contributions made after the measurement
date of 6/30/14 (FY15 contributions) assuming they were recorded in FY15 to
Pension Expense when made
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26,207,480
26,207,480
• Illustration (continued)
- Journal Entries – Year 1
DR
D
Net Pension Liability
25,520,785
Deferred Outflows
12,825,887
Deferred Inflows
CR
38,346,672
To record deferred outflows/inflows at the measurement date
(6/30/14) to be recorded at 6/30/15
E
Pension Expense
Net Pension Liability
To record proportionate share of pension
expense for the measurement period (7/1/13-6/30/14)
recorded in FY15
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31,834,829
31,834,829
Net Pension
Liability
• Illustration (continued)
- T Accounts – Year 1
Corresponding to
journal entries on
previous pages
Unrestricted
Net Position
114,950,612
A
472,082,363
B
25,459,168
D
25,520,785
A
472,082,363
B
E
25,459,168
31,834,829
452,937,239
331,672,583
Deferred
Outflows
C
26,207,480
D
12,825,887
Cash
C
26,207,480
39,033,367
26,207,480
Deferred
Inflows
D
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Pension Expense
38,346,672
38,346,672
E
31,834,829
31,834,829
• Employer Implementation Considerations
- Census data will be examined more closely than in
the past by the retirement system, the plan auditors
and the employer auditors
• Review processes and controls over significant elements of
census data
• Large (“individually important”) employers may be selected
by the plan auditor for additional testing of census data; the
selection of large employers will likely rotate each year
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• Employer Implementation Considerations, continued
- Employer and their auditor can use the plan auditor’s
report on schedules to provide sufficient audit
evidence
• Review plan auditor’s report and any related opinion
modifications
• Evaluate whether plan auditor has necessary competence
and independence
- Employer auditor will gain understanding of controls
over census data and will also audit the census data
(sample) provided to the plan
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• Employer Implementation Considerations, continued
- Employer and their auditor should verify and
recalculate amounts in schedules specific to employer
• Verify/reconcile employer amounts used in allocation
percentage (numerator)
• Recalculate allocation percentage of employer
• Recalculate allocation of pension amounts based on
allocation percentage of employer
- Once plan provided information is verified,
employers will have their financial reporting
components
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• Employer Implementation Considerations, continued
- Employer will need to track the following components
- Differences between actual and expected experience (for
example, terminations, mortality, etc.)
- Changes in assumptions
- Differences between projected and actual earnings
- Changes in employer’s proportionate share of contributions
- Employer contributions subsequent to measurement date
- Difference between actual contributions and proportionate
share
- Employer will need to maintain amortization
schedules for their proportionate share
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• Disclosure Requirements
- Employers must disclose the following:
• Description of the plan and benefits provided
• Significant assumptions employed in the measure of net
pension liability, description of benefit changes and changes
in assumptions, assumptions related to discount rate,
employer’s share of pension had discount rate been 1%
higher and lower
- Much of this information will be lifted from PEBA’s financial
statements (Note 8 for their 6/30/2014 financial)
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• Disclosure Requirements
- Employers must disclose the following:
• The balances of deferred outflows of resources and deferred
inflows of resources presented by source
• The net amount of deferred outflows and inflows that will be
recognized as pension expense and the amount of deferred
outflows that will reduce net pension liability – for each of
the next 5 years and in aggregate thereafter
• The employer’s percentage of net pension liability, how it
was determined, and any change in the percentage since the
previous measurement date
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• Disclosure Requirements
- Required Supplementary Information:
• Schedule of employer’s proportionate share of net pension
liability
- Last 10 years required (or years available until 10 years are
available)
• Schedule of employer’s contributions for last 10 years
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• Disclosure Requirements
-
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The Comptroller General’s office will be developing
a disclosure template in the next few months
In addition to information in the notes to PEBA’s
financial statements, PEBA will also provide basic
information about the plan
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• Guidance Available
- GASB 67 Implementation Guide
- GASB 68 Implementation Guide
- Two White Papers
• Government Employer Participation in Agent MultipleEmployer Plans: Issues Related to Information for Employer
Reporting
• Agent Multiple-Employer Plans: Issues Associated with
Testing census Data in an Audit of Financial Statements
- Four Audit Interpretations
- GASB Implementation Toolkit
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• Questions?
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Laura Self: laura.self@elliottdavis.com
Website: www.elliottdavis.com
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