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GASB Proposes New Guidance on Fiduciary Activities, Asset Retirements and Pensions

The proposals addressing fiduciary activities and certain asset retirement obligations would establish guidance in areas where little or none exists today.


The Governmental Accounting Standards Board (GASB) has issued three Exposure Drafts proposing accounting and financial reporting guidance related to fiduciary activities, certain asset retirement obligations, and pension issues.

The Exposure Draft, Fiduciary Activities, would establish guidance regarding what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. The proposed Statement would apply to all state and local governments.

The Exposure Draft, Certain Asset Retirement Obligations, would establish guidance for determining the timing and pattern of recognition for liabilities related to asset retirement obligations and corresponding deferred outflows of resources. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset, such as the decommissioning of a nuclear reactor.

The Exposure Draft, Pension Issues, addresses practice issues raised by stakeholders during the implementation of Statements No. 67, Financial Reporting for Pension Plans, and No. 68, Accounting and Financial Reporting for Pensions.

“These proposed standards are designed to improve the reporting of important activities and transactions in governmental financial statements,” said GASB Chair David A. Vaudt. “The proposals addressing fiduciary activities and certain asset retirement obligations would establish guidance in areas where little or none exists today. The Exposure Draft addressing pension issues comes in response to issues raised by GASB stakeholders as they carried out the process of implementing the recent pension standards. Together, these proposals are designed to improve consistency, comparability, and clarity in governmental accounting and financial reporting.”

The Exposure Drafts are available on the GASB website, Stakeholders are encouraged to review and provide comments on the Exposure Drafts by the following dates:

  • Pension Issues—February 12, 2016
  • Fiduciary Activities—March 31, 2016
  • Certain Asset Retirement Obligations—March 31, 2016.

Pension Issues

The objective of this proposed Statement is to improve consistency in the application of accounting and financial reporting requirements for employers related to pensions and for pension plans by addressing certain practice issues.

Specifically, this proposed Statement would address issues regarding:

  • Presentation of payroll-related measures in required supplementary information
  • Selection of assumptions and the treatment of deviations from the guidance in Actuarial Standards of Practice for financial reporting purposes
  • Classification of payments made by employers to satisfy employee contribution requirements.

Fiduciary Activities

Governments currently are required to report fiduciary activities in fiduciary fund financial statements. Existing standards are not explicit, however, about what constitutes a fiduciary activity for financial reporting purposes. Consequently, there is diversity in practice with regard to identifying and reporting fiduciary activities.

The central objective of this proposed Statement is to enhance the consistency and comparability of fiduciary activity reporting by state and local governments. The proposal also is intended to improve the usefulness of fiduciary activity information, primarily for assessing the accountability of governments in their roles as fiduciaries.

Certain Asset Retirement Obligations

Existing laws and regulations require state and local governments to take specific actions to retire certain capital assets, such as the removal and disposal of wind turbines in wind farms, and the dismantling and removal of sewage treatment plants. Other obligations to retire certain capital assets may arise from contracts or court judgments.

Under this proposed Statement, a government that has legal obligations to perform future asset retirement activities related to its tangible capital assets would be required to recognize a liability and a corresponding deferred outflow of resources. The proposal identifies the circumstances that determine if and when to recognize these transactions.

The objective of this proposed Statement is to enhance the comparability of financial statements by establishing uniform criteria for governments to recognize and measure these asset retirement obligations, including obligations that previously may not have been reported. This proposed Statement also would enhance the usefulness of the information provided to financial statement users by requiring disclosures related to these asset retirement obligations.