The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and updates standards of accounting and financial reporting for U.S. state and local governments.  The GASB has been recognized as the authority on generally accepted accounting principles for these entities.  It has become essential for the reporting standards of state and local governments to be handled by a focused board because the requirements and informational needs of these groups are very different from a for-profit business.  The GASB standards are also vital in aiding governments in demonstrating their accountability to their constituents when dealing with public resources.

What are GASB 43 & 45

  • The government equivalent to FASB – 106 and FASB – 112 for private employers
  • Require accrual of the cost of post-employment benefits other than pensions (OPEB)
  • GASB – 43 applies to benefit plans while GASB – 45 applies to employers.
  • The statements define two kinds of OPEB
    • Healthcare benefits (e.g. medical, dental, vision) – regardless of how provided
    • Other forms of OPEB (e.g. life insurance, LTD, STD, LTC) that are provided separately from a defined benefit pensions plan

GASB Timeline

  • Phase 1 Governments (over $100 million in revenues)
    Financial statements for periods beginning after 12/15/05
  • Phase 2 Governments ($10 – $100 million in revenues)
    Financial statements for periods beginning after 12/15/06
  • Phase 3 Governments (under $10 million in revenues)
    Financial statements for periods beginning after 12/15/07

Why should you comply?

Avoid adversely impacting bond ratings

  1. Failure to comply is tantamount to not producing a required financial statement.
  2. Rating agencies will take a dim view of this.

What needs to be done?

  • Read and understand GASB – 43 and GASB – 45.
  • Determine data requirements needed to generate the required reports on an accrual basis.
  • Make the necessary changes in administrative systems.
    • Most administrative systems were designed with pension benefits in mind, not OPEB.
    • Substantial changes might be needed before the necessary data can be produced.
    • Work with MDG on an ongoing basis to determine whether or not the appropriate data is actually being generated and make changes as necessary before time runs out.
    • Arrange for the required accounting, actuarial and other reports to be generated.
    • A qualified actuary will be needed. MDG can arrange this.


GASB – 43 and GASB – 45 make sense and require disciplined accounting for OPEB.

  • Substantial lead time will be needed for most governments to be in a position to comply
  • Consequence of non-compliance is severe.
  • MDG is ready, willing and able to help.