Pension Plans: GASB Vs. FASB
Pension Plans By Tay’veun Glenn Introduction Pensions are known as a retirement account that most employers maintain to give employees who have stayed with the company a payout upon retirement. Most employers give recipients of pension accounts a choice between a lump-sum payment or monthly annuity payments that are based upon the amount of time that the employee worked and their final salary prior to leaving the company. There are different types of pension plans and the use of each one is dependent on the employer. The Governmental Accounting Standards Board and Financial Accounting Standards Board both have to report pensions and have designated different ways to account for it. The GASB and FASB have always been separate entities but …show more content…
The purpose is “to develop, implement, and establish standards for accounting and financial reporting activities are accurate and reliable, and the resulting financial reports are as accurate and beneficial to the end users.” The end users that are discussed in the purpose are the outside users of the financial statements. Outsider users are…… …show more content…
The first major difference is the entities that are reporting; GASB Statement No. 68 focuses on governmental healthcare entities while FASB Statement No. 158 focuses on for-profit and not-for-profit entities. The FASB statement No. 158 “did not change the amount reported in pension expense or the calculation of the actuarially determined liability from previous standards and allowed the change in the unfunded liability not reported in pension expense to be reflected as other comprehensive income.” The GASB Statement No. 68 decided to change how the liability and pension expense were measured. They also decided that they would limit the amount of changes in the liability account that does not go through to the pension expense and it will also “require those changes to be reflected as deferred outflows and inflows of resource of net pension (under GASB Statement No. 63), not through equity as the FASB statement does.” GASB did make the update later than FASB but attempted to enhance the update because of the direction that FASB went when it created more broad interpretations that GASB is rectifying for governmental
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