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LJ Citv of Elk River March l3, 2008 Page 24 GASB Statement No. 49 -,4ccourrtit7g and Financial Reporting for Pollutias Remediation Obligations This statement was issued November 2007 and is effective far periods beginning after December 15, 2007, but liabilities should be measured at the beginning of 11taY period so that beginning net assets can be restated. This standard is intended to ensure that certain cost and Ions-term obligations related to pollution clean up not specifically addressed by current governmental accounting standards will be included in fmancia] reports. The staudards set forth the key circumstances under which a govemment would be required to report a liability related to pollution remediation. A govemment would have to determine whether one or more components of a pollution remediation liability are recognizable if any of the following five obligating events or triggers occurs: • A govennnent is compelled to take remediation action because pollution creates an inuninenT endangerment to the public health or welfare or environment, leaving it little or no discretion to avoid remediation action. • A government is in violation of a pollution prevention-related permit or license. u LJ • The government is named, or evidence indicates it will be named, by a regulator that has identified the government as a responsible party ox potentially responsible party for remediation, or as a govemment responsible for sharing costs. • A government is named, or evidence indicates that it will be named, in a lawsuit to compel the govemment to participate in remediation. • A govemment commences or legally obligates itself to commence clean up activities or monitoring or operation and maintenance of the remediation effort. If any ofthe above bullets are meY, the pollution remediation liabilities should be measured at their current value using the expected cash Ilow technique, which measures the liability as a sum ofprobability-weighted amounts in a rattge of possible estimated amounts. Expected recoveries from other responsible parties and from insurers reduce the amount of remediation expense. Statement No. 49 also specifies criteria for capitalization aC some pollution remediation outlays. This statement more closely aligns the financial reporting requirements for pensions with Those for OPEB and, in doing so, enhances information disclosed in notes to financial statements or presented as required supplementary information (RSI) by pension plans and by employers that provide pension benefits. The reporting changes required by this statement amend applicable note disclosure and RSI requirements of Statement No. 2>, FinanciaL Repotting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27 ,Accounting fox Pensions by State and Local Goverrunental Employers, to conform with requirements of Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This statement requires defined benefit pension plans and sole and agent employers present the following information related to cote disclosures: • Notes to financial statements should disclose the funded status of the plan as of the most recent actuarial valuation date. Defined benefit pension plans also should disclose actuarial methods and significant assumptions used in the most recent actuarial valuation in notes to financial statements instead of in notes to RSI. • If the aggregate actuarial cost method is used to determine the annual required contribution of the employer (ARC), notes to financial statements should disclose the funded status of the plan, and a schedule of funding progress should be presented as RSI, using the entry age actuarial cost method. Plans and employers also should disclose that the purpose of doing so is to provide information that serves as a surrogate for the funded status and funding progress of the plan. 95?.835.9090 Fax 952.835.3261 www.aemcpus'.cum