GASB addresses fiduciary activities, asset retirement obligations, pension issues

GASB proposed new accounting and financial reporting guidance Tuesday related to fiduciary activities, certain asset retirement obligations, and pension issues.

The proposals were contained in three separate exposure drafts—Fiduciary Activities, Certain Asset Retirement Obligations, and Pension Issues.

“These proposals are designed to improve consistency, comparability, and clarity in governmental accounting and financial reporting,” GASB Chairman David Vaudt said in a news release.

Fiduciary Activities

In Fiduciary Activities, GASB proposes guidance regarding what constitutes fiduciary activities for reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. The proposal would apply to all state and local governments. GASB seeks comment by March 31.

This exposure draft seeks to enhance the consistency and comparability of fiduciary activity reporting by state and local governments. Currently, governments are required to report fiduciary activities in fiduciary fund financial statements. But diversity in practice persists because existing standards do not explicitly state what constitutes a fiduciary activity for financial reporting purposes, according to GASB.

The proposal also is designed to improve the usefulness of information about fiduciary activity, providing a means for assessing the accountability of governments in their roles as fiduciaries.

Certain Asset Retirement Obligations

In Certain Asset Retirement Obligations, GASB proposes guidance for determining the timing and pattern of recognition for liabilities related to asset retirement obligations and corresponding deferred outflows of resources. An asset retirement obligation is a liability that is legally enforceable and associated with the retirement of a tangible capital asset, such as the decommissioning of a nuclear reactor. GASB seeks comment by March 31.

The proposal is designed to make financial statements more comparable by establishing uniform criteria for governments to recognize and measure asset retirement obligations, including obligations that previously may not have been reported.

Under the proposal, a government that is legally obligated to perform future asset retirement activities related to its tangible capital assets would be required to recognize a liability and a corresponding deferred outflow of resources. The proposal provides guidance on whether and when these transactions should be recognized.

The proposal also would require disclosures related to these asset retirement obligations.

Pension Issues

In Pension Issues, GASB addresses practice issues raised during the implementation of Statements No. 67, Financial Reporting for Pension Plans, and No. 68, Accounting and Financial Reporting for Pensions. Comment is sought by Feb. 12.

The objective of the proposal is to improve consistency in application of the standards. The proposal would address issues regarding:

• Presentation of payroll-related measures in required supplementary information.
• Selection of assumptions and the treatment of deviations from the guidance in Actuarial Standards of Practice for financial reporting purposes.
• Classification of payments made by employers to satisfy employee contribution requirements.

—Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.