7.1. SR 02-19-2008 - Laserfiche WebLink

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Summary of Statement No. 45 fy••••~~ Gipvernmental Accauntint~ ~t~ndards Board Summaries /Status Summary of Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions (Issued 6/04) In addition to pensions, many state and local governmental employers provide other postemployment benefits (OPEB) as part of the total compensation offered to attract and retain the services of qualified employees. OPEB includes postemployment healthcare, as well as other forms of postemployment benefits (for example, life insurance) when provided separately from a pension plan. This Statement establishes standards for the measurement, recognition, and display of OPEB expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. The approach followed in this Statement generally is consistent with the approach adopted in Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, with modifications to reflect differences between pension benefits and OPEB. Statement, ~,..~_..,v .._, No. 4~, Financial-Reporting for_Postemployment Benefit Plans.Qther khan Pension Plans, _addresses financial statement and disclosure _ __. requirements for reporting by administrators or trustees of ~B plan assets or by employers or sponsors that include OPEB plan assets as trust or agency funds in their financial reports. How This Statement Improves Financial Reporting Postemployment benefits (OPEB as well as pensions) are part of an exchange of salaries and benefits for employee services rendered. Of the total benefits offered by employers to attract and retain qualified employees, some benefits, including salaries and active- employee healthcare, are taken while the employees are in active service, whereas other benefits, including postemployment healthcare and other OPEB, are taken after the employees' services have ended. Nevertheless, both types of benefits constitute compensation for employee services. ~r From an accrual accounting perspective, the cost of OPEB, like the cost of pension benefits, generally should be associated with the periods in which the exchange occurs, rather than with the periods (often many years later) when benefits are paid or provided. However, in current practice, most OPEB plans are financed on a pay-as-you-go basis, and financial statements generally do not report the financial effects of OPEB until the promised benefits are paid. As a result, current financial reporting generally fails to: Page 1 of 5 http://www.gasb.org/st/summary/gstsm45.htm1 2/12/2008