GASB 68—Accounting and Financial Reporting for Pensions

DashBoard, Aug. 19, 2015

Submitted by Jennifer M. Watkins, CPA, Yeo & Yeo CPAs & Business Consultants

What is Governmental Accounting Standards Board 68 and what does it affect as it relates to school districts?

The following are changes and actions required by school districts implementing GASB 68.

  • Under the old standard, school districts recorded pension expense equal to the amount they remitted to the Michigan Public Schools Employee Retirement System. Under GASB 68, districts are required to record their estimated proportionate share of the unfunded pension liability under MPSERS.
  • The change is effective for the June 30, 2015 year-end (this year).
  • This will not affect the general fund and its operations. It will only be recorded on the district-wide financial statements, which are normally issued once a year in the audit report.
  • The unfunded pension liability will most likely be the largest liability on the district-wide financial statements of those districts participating in MPSERS. For almost every district, this will show the district in a negative net position on the district-wide financial statements only.
  • This does not directly impact the retirement rates—districts, as of now, will not change the way they submit retirement dollars to MPSERS.
  • Additional note disclosures and Required Supplementary Information schedules will be required in the district’s audit report.
  • The July 1, 2014 Net Position on the district-wide financial statements will be restated for the June 30, 2015 audit. This is an accounting requirement from GASB and not an omission in the previous year on the district’s part.
  • Additional resources and information may be found at the Office of Retirement Services website,, which includes frequently asked questions.
  • ORS audited information used by your district’s auditor is now available.

District’s responsibility:

  • Ensure ORS information is accurate.
  • Populate the information for the newly required Notes and RSI schedules in the audited financial statements.
  • Complete district-wide entries and incorporate into district-wide financial statements.
  • Some districts have their auditors assist with preparation of financial statements and district-wide journal entries. If this is the case, the district needs to provide the necessary information to complete those services and have a knowledgeable and experienced individual within the district review and approve those services.
  • Document controls of the payroll system including pension expense.
  • Communicate the impact of the pension accounting change for the district to the Board of Education, Audit and/or Finance Committees and the public.

Auditor’s responsibility:

  • Audit the pension information (census data, pension expenses, total payroll, proportionate share calculation, etc.).
  • The auditor’s role in auditing the pension information will be determined once it is known what level of report the Auditor General will provide on the pension information from ORS; hence, the extent of the auditor’s role is yet to be fully determined.
  • Ensure note disclosures, RSI schedules and district-wide entries are accurate.
  • Ensure controls and procedures over the payroll process (including pension expense) and reporting are effective.
  • Provide communication to boards and committees.

GASB regulations can be difficult to navigate. If you have questions, please contact your local Yeo & Yeo office.

Jennifer M. Watkins, CPA, is a Senior Manager and serves in Yeo & Yeo’s audit department. She specializes in audit services for school districts and leads the firm’s Education Services team. Contact Jennifer via email at or call 800.899.4742.

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