Although the required implementation of GASB 84, Fiduciary Activities, is upon us (first effective with Dec. 31, 2019 year-ends), the GASB guidance on this standard continues to evolve. After GASB 84 and the GASB Implementation Guide 2019-2 was issued, it became clear that many types of defined contribution plans, pension plans, and OPEB plans would potentially be scoped in to a government’s financial reporting entity as a fiduciary activity. Recently, due to cost/benefit considerations, GASB began revisiting these conclusions; they’ve now added a new project to their agenda to specifically address the applicability of certain component unit criteria for defined contribution, pension, and OPEB plans. This same project will also address Section 457 plans. Ultimately, this new project is expected to change GAAP through the issuance of a new GASB standard. We strongly encourage you to review GASB’s project page on this proposed standard to learn more about the background and need for this project, and the tentative decisions made to date.
Once this new standard is issued, it will likely have a significant impact on determining whether defined contribution, pension, and OPEB plans meet the definition of a fiduciary component unit under GASB 84. In fact, the new standard is likely to change today’s conclusions about the inclusion of certain defined contribution plans in a government’s financial statements.
An exposure draft of a new standard that will result from this project is expected in March 2020 with a 30-day comment period; a final standard is expected to be issued in June 2020.
We strongly encourage you to continue to follow GASBs discussions on this project and assess the impact the ultimate standard will have on your organization’s conclusions under GASB 84.
If you have any questions on GASB 84 implementation, we’re here to help!