GASB 68 Implementation: Is Your Institution Prepared?

The implementation date for GASB 68 is right around the corner, impacting institutions with a year-end of June 30, 2015. Employers will be required to recognize the net pension liability on the statement of net position for the respective defined benefit pension plan in which it participates.

For employers participating in the cost-sharing multi-employer plans provided by the Michigan Public School Employees Retirement Systems (MPSERS), the reports and data to be provided by the plan actuary for the MPSERS is anticipated to be available in early August. While institutions are waiting for the information, there are a few key points to consider in adopting GASB 68.

Reasonableness of the data provided – The plan will calculate each employer’s allocation percentage and the collective pension amounts. It's encouraged to review the Schedule of Employer Allocations for reasonableness. Additionally, the underlying payroll records of the participating employers are required to be verified for completeness and accuracy. This includes obtaining an understanding of the processes and internal controls in place by plan management over such data. The extent and frequency of such testing depends primarily upon the procedures performed and the opinion issued by the plan auditor.

Allocation among funds – The recognition of the net pension liability, deferred outflows of resources, deferred inflows of resources and pension expense will be reported for the college or university as a whole on the statements of net position and revenues, expenses and changes in net position. However, if a college or university also presents combining statements of net position and revenues, expenses and changes in net position as supplementary information, it will need to consider how the amounts recognized will be allocated among funds. Specific guidance to recognize these amounts consistently among participating employers has not been issued by the State of Michigan. Consider discussing this with your engagement team. 

Accounting for contributions made subsequent to the measurement date – Employer contributions made between the plan year end (September 30) and the year end of the college or university (June 30) will not be reflected in the net pension liability and should be reported as deferred outflows of resources. The college or university should determine the employer contributions subsequent to the measurement date as it will not be provided otherwise. 

Reporting and disclosure – Rehmann will be providing our clients with the related templates for reporting and disclosure. Contact a member of your engagement team for such information.

The extent of the testing performed by the college or university auditor is dependent upon the opinion obtained from the plan auditor. For now, we must wait to receive such information.

Published in Higher Education

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