New Project Spotlight

In December 2019, the GASB added two projects to its current technical agenda—Compensated Absences and on Prior-Period Adjustments, Accounting Changes, and Error Corrections. Both had been pre-agenda research activities since 2018.  In addition, the Board added a third project, Certain Component Units Criteria, to its agenda at the January teleconference meeting.
 

Compensated Absences


This project contemplates improvements to the current accounting and financial reporting treatment for accrued leave benefits. In this context, accrued leave benefits refers primarily to vacation and sick leave balances.
This project contemplates improvements to the current accounting and financial reporting treatment for accrued leave benefits. In this context, accrued leave benefits refers primarily to vacation and sick leave balances.


Governments often pay employees for accumulated vacation and sick leave benefits when employment concludes. A variety of policies exist across governments around different types of leave and the employee classes where those benefits are offered. The project will consider improvements to existing guidance related to:
  • Certain types of accrued leave benefits not included in current literature, such as paid time off (where for example, vacation and sick leave are not distinguished)
  • The existing options for measuring sick leave liabilities, and
  • Note disclosures.
Project deliberations are scheduled to begin in February. The Board anticipates issuing an Exposure Draft for public comment in the first quarter of 2021.

More information

 

Prior-Period Adjustments, Accounting Changes, and Error Corrections


This project is intended to improve the current accounting and financial reporting guidance for prior-period adjustments, accounting changes, and error corrections in Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The Board will reconsider existing literature to address inconsistencies in practice, confusion in applying existing requirements, and the usefulness of related disclosures.

GASB research has found that these types of events can be potentially significant—and that inconsistencies in practice exist in the accounting and financial reporting in these areas. The Board believes financial statement users would benefit from enhanced comparability and consistency.

Project deliberations are scheduled to begin in February, when the Board will consider classification of the types of events. The Board anticipates issuing an Exposure Draft for public comment in the first quarter of 2021.

More information

 

Certain Component Unit Criteria


In this project, the Board has tentatively decided to propose that (1) for purposes of determining whether a primary government is financially accountable, except for defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and other employee benefit plans, the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board in circumstances in which the primary government performs the duties that a governing board typically performs, and (2) the financial burden criterion in paragraph 7 of Statement No. 84, Fiduciary Activities, be applicable to only defined benefit pension plans and defined benefit OPEB plans that are administered through trusts that meet the criteria in paragraph 3 of Statement No. 67, Financial Reporting for Pension Plans, or paragraph 3 of Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, respectively. Those proposals would reflect benefit and cost considerations of reporting certain defined contribution pension plans, defined contribution OPEB plans and other employee benefit plans in a government’s fiduciary fund financial statements. Further, those proposals would include in level A literature in the GAAP hierarchy that the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board in circumstances in which the primary government performs the duties that a governing board typically performs except in those instances discussed above, thus clarifying that it should be applied more broadly.

In addition, due to the interrelated nature between (1) the fiduciary fund reporting of those arrangements, which include certain Internal Revenue Code Section 457 plans, and (2) the project currently on the Board’s technical agenda regarding Section 457 plans, another objective of this project is to consider the respondent feedback on the Exposure Draft, Internal Revenue Code Section 457 Deferred Compensation Plans That Meet the Definition of a Pension Plan and Supersession of GASB Statement 32, in light of the proposals related to the applicability of certain component unit criteria. The Board has tentatively decided to propose that (1) all accounting and financial reporting requirements relevant to pension plans be applied to Section 457 plans that meet the definition of a pension plan, and (2) all accounting and financial reporting requirements relevant to pensions be applied to benefits provided through Section 457 plans that meet the definition of a pension plan. The proposals also would require investments of all Section 457 plans to be valued as of the end of the plan’s reporting period in all circumstances.

Because Statement 84 and Implementation Guide No. 2019-2, Fiduciary Activities, are currently being implemented, there is an urgency regarding this project. As a result, it is on a fast track.  After adding the project to its current technical agenda, the Board immediately began deliberations and plans to issue an Exposure Draft of a proposed Statement in March 2020.