Accounting for benefits, incl. FASB, GASB |
The ROI of a 408(b)(2) Audit (PDF)
"This paper will discuss the benefits of the 408(b)(2) audit, and utilize a real-world case study to illustrate how the 408(b)(2) audit represents a true return on investment for plan sponsors." (Roland I Criss)
Guidance Provided on Electronic Health Record Incentives
"[M]edical providers must comply with standards for use of the technology and properly account for the incentive payments in an area where accounting principles are in an infant stage. [Last] week, the Healthcare Financial Management Association (HFMA) published an issue analysis to provide clarity on accounting for incentive payments received under the Health Information Technology for Economic and Clinical Health . . . Act." (American Institute of Certified Public Accountants)
Low Pension Discount Rates = Big Accounting Liabilities for FY2011
"Using the Citigroup Pension Discount Curve (CPDC) as a proxy, pension accounting discount rates could decrease by 100 basis points (or more). This will mean a big increase in the pension liability and net balance sheet liability for many plans." (Van Iwaarden Associates)
[Opinion] Latest News on Overall GASB Process; Two Views of Proposed Reforms
"One area of the proposed changes in the GASB rules that has been particularly worrisome has been those related to the manner in which cost-sharing plans will be required to allocate their net pension liability, pension expense, and deferred outflows of resources and deferred inflows of resources to their participating employers. The impact of this aspect of the proposed GASB changes on employers who participate in cost sharing plans could be devastating." (National Council on Teacher Retirement)
GASB Update: Two Views of Proposed Reforms for Governmental Pension Reporting and Accounting Rules
"[T]wo recent studies provide contrasting views of the likely results of the proposed changes as they now stand. The first, a working paper by Robert Novy-Marx, concludes that under the GASB rules as proposed, a governmental pension plan can improve its funding status 'literally by burning money.' The second, [from the Center for Retirement Research at Boston College] finds that employers and plan administrators should be prepared for funded ratios reported in their financial statements to decline sharply under the new GASB rules, but that '[p]olicymakers should not let new numbers throw them off course.'" (National Council on Teacher Retirement)
A Look at Public Sector Defined Contribution Health Accounts
"GASB 45 requires that unfunded liabilities be amortized over a 30-year actuarial time period. The magnitude of the OPEB liabilities was much more obvious after the accounting standard was implemented. To address these large OPEB liabilities, many state and local governments have reduced the health benefits offered to employees upon retirement." (National Association of Government Defined Contribution Administrators)
SEI Finds Narrowing of Range of Discount Rates Used by Defined Benefit Plan Sponsors
"According to the analysis of a database of 686 plan sponsors, the research shows a 140 basis point range of discount rates used for 2010 pension disclosure -- a 21 basis point decrease in range from 2009. The results of the study provide companies with guidance for setting the discount rate and return on asset (ROA) assumptions that pension plan sponsors will use for 2011 year-end disclosures." (PLANSPONSOR.COM)
States' Pension Fund Accounting Rules Examined
"[GASB] proposals would change the way public pension funds value their assets -- money that governments and their employees contribute to pension funds as well as the funds that pension investments earn -- and how they value their liabilities, or the benefits retirees are entitled to based on their pay and years of service." (Pittsburgh Post-Gazette)
[Opinion] Impact of GASB Public Accounting Proposals on Employers Participating in State Retirement Systems (PDF)
"If these proposals are finalized without change, participating employers will need to substantially revamp their accounting systems at considerable expense. Compliance is expected to be the responsibility of the employer, and the retirement system's ability to provide assistance in many cases may be limited. That may leave the burden of compliance on the contributing government employers." (Groom Law Group)
California Panel Releases Model Pension Disclosure Guidelines
"The California Actuarial Advisory Panel . . . has adopted a set of model disclosure elements recommended for actuarial valuation reports on public retirement systems in California." (PLANSPONSOR.COM)
Getting Executive Compensation Ready for 2012: Starting with ISS Guidelines (PDF)
"This Client Alert addresses some of the key implications for publicly traded U.S. companies, and is followed by our article titled 'Candor for Compensation Committees' which is reproduced from the latest edition of Board Member magazine because the article highlights actions that compensation committees should be taking this winter in order to be ready for the 2012 proxy season." (Paul Hastings LLP)
[Opinion] American Academy of Actuaries Letter on Accounting for Post-Retirement Benefits Other than Pensions (PDF)
"On behalf of the Joint Committee on Retiree Health and Pension Accounting Committee of the American Academy of Actuaries', we appreciate the opportunity to provide comments to the National Association of Insurance Commissioners (NAIC) on the exposure drafts of Statements of Statutory Accounting Principles (SSAP) No. 92 and No. 102, which are intended to replace existing standards governing accounting for pension benefits and postretirement benefits other than pensions (OPEBs)." (American Academy of Actuaries)
New Research Report Using GASB-Proposed Metrics Reveals Risks of Retirement Plan 'Depletion'
"Running out of money -- completely -- is a pretty big deal where I come from. That's the pension equivalent of the collapse of a Ponzi scheme. This is far worse than Social Security which can at least pay 75 cents on the dollar to the next generation under its current design." (Governing)
PBGC's Reported Deficit Doesn't Justify Premium Increase, Says American Benefits Council
"In its annual report for fiscal year 2011, the PBGC reported a record $26 billion deficit, a $3 billion increase from the $23 billion reported last year. However, according to [James A. Klein, president of the American Benefits Council], 'flaws in the way PBGC's financial condition is reported makes the situation appear far worse than reality.'" (Wolters Kluwer Law & Business / CCH)
Logical Implications of GASB's Methodology for Valuing Pension Liabilities (PDF)
"It is well known that the funding status of state and local government defined benefit pension plans, as measured by the accounting methodology prescribed by the Governmental Accounting Standards Board (GASB), improves when the plans take on more investment risk. This paper documents several lesser known logical implications of the GASB methodology." (University of Rochester, Simon Graduate School of Business)
GASB Calls for More Disclosure of State and Local Government Pension Obligations
"In the first step of what could be a lengthy rule-making process, the Governmental Accounting Standards Board issued a 'preliminary view,' on the proposal to create new rules, which calls for five-year projections of cash inflows and outflows and other financial obligations, including pensions obligations and long-term contracts, 'with explanations of the known causes of fluctuation,' . . . ." (Business Insurance)
Outlook Bleak for Pension Plan Expense and Contributions
"'Even though discount rates moved somewhat higher during November, they are likely to be in excess of 40 basis points lower at the end of this year than they were at the end of 2010' said Kevin Armant, principal in Mercer's Financial Strategy Group. 'Because equities have also underperformed expectations, corporations who use a December 31 measurement date will likely see larger pension liabilities on their balance sheet, as well as higher 2012 pension expense.'" (PLANSPONSOR.COM)
PBGC Plan Valuation Problems Go Beyond United Airlines
"The PBGC's inspector general said the agency lacks internal controls over the valuation of terminated pension plan assets, not just over the handling of United Airlines' plan terminations that the IG's report called 'seriously deficient.'" (Pensions & Investments; free registration required)
Full Funding and Cost Disclosure Needed in Public Pension Plan Reform, Paper Says
"The policy paper, 'Creating a New Public Pension System,' said reform must address structural problems involving unpredictable costs, incentive to underfund, and labor market distortions . . . ." (Business Insurance)
How Would GASB Proposals Affect State and Local Pension Reporting?
"Most economists contend that the discount rate should reflect the risk associated with the liabilities and, given that benefits are guaranteed under most state laws, the appropriate discount factor is closer to the riskless rate." (Center for Retirement Research at Boston College)
Steering Clear of Pension Benefit Restrictions
"Negative asset performance and declining valuation interest rates during 2011 will cause some pension plans to face benefit restriction issues for the first time in 2012. Potential repercussions include limits on accelerated distributions (lump sums), restrictions on plan amendments increasing the value of benefits, mandatory benefit accrual freezes and restrictions on unpredictable contingent event benefits . . . ." (Van Iwaarden Associates)
[Opinion] Pension Crisis Accounting Rule Comments Rigged by Gluttons at the Public Trough
"[Take a] look at comments opposing Government Accounting Standards Board proposed rules for a tiny bit of honesty about municipal and state pensions. Sheila Weinberg, founder of The Institute for Truth in Accounting, studied all 659 comments on rule changes that will affect whether politicians finally have to admit at least in small part the magnitude of our municipal and state pension crisis. She said Tuesday, '95 percent of the comments came from people who have a direct vested interest in governments concealing the true costs.'" (The Franklin Center for Government and Public Integrity)
A Better Answer to the Actuarial Discount Rate Debate (PDF)
"[The] article presents a fresh perspective on actuarial discount rates and understanding pension risk." (International Foundation of Employee Benefit Plans via Cheiron, Inc.)
[Guidance Overview] IRS Clarifies Application of All Events Test to an Employer's Bonus Pool Liability
"The IRS issued Rev. Rul. 2011-29 last week, which clarifies the IRS position regarding a taxpayer's ability to accrue in the year before payment its liability for bonuses under a program creating a bonus pool and resulting in a liability to a group of employees." (Miller & Chevalier Chartered)
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