Gasb Statement 27

Proposed

New Pension Accounting Changes

Accounting 422

Internal Auditing

Dr. Peter Mark Hughes

California State University – Fullerton

December 6, 2011

By:

Tri Pham

Chul-Woo Park

Jag Tooray

Guy Martinez

Introduction

The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments.

Accounting and financial reporting standards are designed for the government environment and essential because governments are fundamentally different from profit businesses. Furthermore, the information needs of the users of government financial statements are different from the needs of the users of private company financial statements. The GASB members and staff understand the unique characteristics of governments and the environment in which they operate.

The GASB is an operating component of the FAF, which is a private sector, a nonprofit able entity. Funding for the GASB comes from sales of its own publications, in part from state and local governments, and the municipal bond community. The standards are not federal laws or regulations and the organization does not have enforcement authority. Compliance with GASB’s standards is enforced through the laws of some individual states and through the audit process, when auditors render opinions on the fairness of financial statement presentations in compliance with GAAP.

What the Accounting Rules Were

Statement 27, Accounts for Pensions by State and Local Governmental Employers, describes the standards that are used for measurement,...