The Governmental Accounting Standards Board Statement 75 will affect some local government’s financial statements similar to how GASB 68 changed disclosure requirements for retirement (or pension) benefits.
Statement 75 requires cities that provide other post-employment benefits, such as retiree health care, to begin reporting the net OPEB liability on their financial statements.
Even though employees do not receive the benefits earned until they retire, the employer has a current obligation to provide those benefits at that future time. The employer is responsible for the net obligation (the overall obligation minus the assets accumulated in an OPEB plan) and must report that obligation as a liability on its financial statements. This liability is called the net OPEB liability.
Although cities will not have to implement the new standard until their fiscal year beginning after June 15, 2017, officials should begin preparing now for another major increase in liabilities on their financial statements, advised Heather Ricard, director of Risk Management Services.
In addition to reporting the new OPEB liability, cities will have to provide additional footnote disclosures and supplementary information, such as interest rate assumptions, explanations of how and why the OPEB liability changed from year to year, and summary OPEB liability information.
GASB anticipates releasing a final implementation guide in November 2017. Statement 75 replaces previous GASB Statement 45 requirements.
The Governmental Accounting Standards Board establishes accounting and financial reporting standards for state and local governments that follow Generally Accepted Accounting Principles.