OPEB reporting update (GASB 45 to 75) serves as a reminder: Don’t forget about previous statements

Plenty of attention surrounds a new Governmental Accounting Standards Board (GASB) statement in the year it is implemented. Then we tend to forget about them in subsequent years. Not all GASB statements are relevant or material for all governments in the year they are implemented, but all governments should continue to monitor them.

A timely example is GASB Statement No. 45, Accounting and Financial Reporting by Employers for OPEB. When preparing for the 2018 implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which updates GASB 45, we asked questions such as “Who uses the State Actuary's online tools for calculating OPEB liability under GASB 45?” and “How material are those governments' Other Post-Employment Benefits (OPEB) liabilities?”

We discovered that relatively few PEBB-member employers who are eligible to use the online tools were doing so and only about 20 percent of PEBB-member employers were correctly reporting their OPEB liabilities. Many of the remaining 80 percent said “It wasn't material when we implemented GASB 45 before 2009.”

Because of the provisions of GASB 45, in which the OPEB liability amortizes over a period of up to 30 years and increases year after year, the OPEB liability might not have been material to the financial statements in 2009. Many employers have not monitored GASB 45 after the year it was implemented, but the OPEB liability has grown over the years to a material amount that was inadvertently omitted from the financial statements. As a result of changing circumstances, it is a good practice to revisit past GASB statements and consider their current applicability.

Available resources:

GASB – All GASB pronouncements are available to download, free of charge, at www.gasb.org. Take a few moments to scan the list. Something that was not relevant or material a few years ago might be material to this year's financial statements.

Government Finance Officers Association (GFOA) – A great tool to use is the GFOA financial statement preparers checklist. The checklists contain detailed questions covering most GASB statements and include the relevant GASB and Governmental Accounting, Auditing and Financial Reporting (GAAFR) references. The checklists are available to download, free of charge, at www.gfoa.org. See the Certificate of Achievement for Excellence in Financial Reporting Program section of the website.

State Actuary – If your OPEB plan has more than 100 members, you will need to hire an actuary to determine your OPEB liability by performing an actuarial valuation. If you have fewer than 100 members, you can use the OPEB calculation tool on the State Actuary website at leg.wa.gov/osa/additionalservices/Pages/OPEB.aspx.

Office of the Washington State Auditor – The BARS Manual also includes our new Other Post-Employment Benefits (OPEB) web page. This includes a list of frequently asked questions we've received about Other Postemployment Benefits and implementing the new standard, GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, effective for fiscal years ending in 2018.

Please contact Debra.Burleson@sao.wa.gov or our online HelpDesk for assistance.