News Release 12-10-04
NEWS RELEASE 12/10/04
Governmental Accounting Standards Board Issues Exposure Draft on Accounting for Termination Benefits
Norwalk, CT, December 10, 2004—The Governmental Accounting Standards Board (GASB) has published an Exposure Draft, Accounting for Termination Benefits, that would establish accounting guidance for state and local governmental employers regarding benefits provided to employees who terminate employment. It would establish guidance for benefits, such as early-retirement incentives and severance benefits that are provided as the result of voluntary or involuntary terminations and is intended to enhance comparability of financial statements by requiring governments to account for similar termination benefits in the same manner.
The proposed Statement would require employers to recognize, in financial statements prepared on the accrual basis of accounting, the cost of voluntary termination benefits when the offer is accepted and the cost of involuntary termination benefits when a plan of termination has been approved and communicated to the employees. In addition, the proposal would establish measurement and disclosure requirements for termination benefits. If enacted, the proposed standards would become effective in two parts. For termination benefits provided through an existing defined benefit OPEB plan, the provisions of the proposed Statement would be required to be implemented simultaneously with the requirements of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. For all other termination benefits, the proposed Statement would be effective for financial statements for periods beginning after June 15, 2005.
The GASB encourages interested individuals and organizations to comment on its proposals through written response. The deadline for submitting comments is March 11, 2005. Additional information about submitting a response is included in the Exposure Draft, which is available on the GASB’s website at www.gasb.org.
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website www.gasb.org.
Governmental Accounting Standards Board
Improving governmental accountability through better financial reporting