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The Governmental Accounting Standards Board has investigated concerns from constituents that questions and answers in the Fiduciary Activities Implementation Guide expanded the criteria for determining component units previously established under Statement No. 14, The Financial Reporting Entity.

During GASB’s January 27 teleconference, after approximately six weeks of research, staff reported that the costs outweigh the benefits of including defined contribution pension, other post-employment benefit plans (OPEB), and similar plans in fiduciary funds statements. Based on this conclusion, GASB approved a fast-tracked project with an exposure draft to be released by March 2020 and a final standard issued by June 2020.

Based on staff recommendations, GASB tentatively agreed that the following modifications would be included in an exposure draft for public comment:

  • The proposed conditions for determining when a component unit exists will be rolled back to the criteria established by GASB 14, The Financial Reporting Entity.
  • Certain arrangements shall be exempt from the notion that the absence of a governing board is equivalent to the government serving as a board. Exempt arrangements include defined contribution pension and Other Postemployment Benefit (OPEB) plans, and other tax deferred savings plans such as Section 457 plans.
  • Financial burden, as defined in Statement No. 84, Fiduciary Activities, is not present when governments are required to make contributions to defined contribution pensions and OPEB plans. In other words, the requirement to contribute to a pension or OPEB plan is a financial burden only when the contributions are to defined benefit plans.

GASB also agreed to delay the effective date of the questions in the Fiduciary Activities Implementation Guide that pertain to these topics: questions 4.3, 4.5, and 4.6. The questions will either be modified or rescinded. The Board also decided to combine this fast track effort with the project on IRC Section 457 deferred compensation plans.  More information can be found on the GASB website.

NACUBO will continue to monitor the GASB deliberations and will provide updates as new information becomes available.


Sue Menditto

Senior Director, Accounting Policy


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