Audits of State and Local Governments

Chapter 10 GOVERNMENTAL PENSIONS AND OPEB ACCOUNTING, AND AUDITING

LEARNING OBJECTIVES

After completing this chapter, you should be able to do the following:

• Recognize the accounting and reporting for pension plan financial statements.
• Identify best practices related to census data.
• Identify methods used to calculate pension liability.
• Recognize the accounting and reporting for postemployment benefits other than pensions (OPEB) plan financial statements.

INTRODUCTION

Governments often establish plans to provide postemployment benefits for employees. A common approach is to use a public employee retirement system (PERS). A PERS is a special-purpose government that administers one or more defined benefit pension plans and sometimes other types of employee benefit plans, including defined contribution, deferred compensation, and defined benefit postemployment benefit other than pension (OPEB) plans. This chapter focuses on defined benefit pension plans and OPEB plans.

GASB Statement No. 67, Financial Reporting for Pension Plans, an amendment of GASB Statement No. 25, addresses accounting and financial reporting for pension plans that are administered through trusts or equivalent arrangements in which

• contributions from employers and nonemployer contributing entities to the pension plan and earnings on those contributions are irrevocable.
• pension plan assets are dedicated to providing pensions to plan members in accordance with the benefit terms.
• pension plan assets ...