What is required to comply with GASB 45?
The new accounting rule dramatically increases the amount and quality of information included in government financial reports with respect to retiree health and other retiree benefits. Local entities, working with their accountants and actuaries, must take a series of steps that include quantifying the unfunded liabilities associated with retiree health benefits. Results of the actuarial valuations must be reported in government audits and updated regularly. The accounting standard sets deadlines requiring large governments to comply beginning with release of their 2007-08 financial reports. Smaller governments will implement GASB 45 in the following two years. Under GASB 45, government financial statements will list an actuarially determined amount known as an annual required contribution, or ARC. This contribution, with regard to health and related benefits, is comprised of the following two costs: The normal cost is the amount that needs to be set aside in order to fund future retir
The new accounting rule dramatically increases the amount and quality of information included in government financial reports with respect to retiree health and other retiree benefits. State and local governments-working with their accountants and actuaries-must take a series of steps that include quantifying the unfunded liabilities associated with retiree health benefits. Results of the actuarial valuations must be reported in government audits and updated regularly. The accounting standard sets deadlines requiring large governments (including the state, most counties, many cities, and some school districts) to comply beginning with release of their 2007-08 financial reports. (The states financial reports usually are released in February or March following the end of the fiscal year.) Smaller governments will implement GASB 45 in the following two years. Under GASB 45, government financial statements will list an actuarially determined amount known as an annual required contribution.
