Annual GASB 68 pension entries

GASB Statement 68 requires each employer in a cost-sharing pension plan to report its proportionate share of the plan's net pension liability, the related deferred outflows and inflows, and pension expense. Most California agencies in a statewide plan receive a report from the plan each year with those amounts. This routine turns that report into journal entries.

What you need

• The plan's GASB 68 accounting report for the measurement date your statements use, including your agency's proportionate share schedules.
• Last year's audited balances for the net pension liability and each deferral, by activity (governmental and each enterprise).
• Contributions paid between the measurement date and your fiscal year end.
• Payroll by activity, or another documented basis for splitting pension amounts among funds.

The routine

1. Start from audited balances, by activity. The beginning net pension liability and deferrals must equal last year's audited amounts after any audit adjustments. If the auditor moved an enterprise share out of governmental activities last year, your schedule must start from the moved amounts, or the enterprise share will be counted twice.
2. Use the final version. If several copies of a schedule exist, use the final one and note which it is.
3. Roll forward. Ending balances from the plan report: net pension liability, deferred outflows and inflows by type (differences between expected and actual experience, changes of assumptions, investment earnings, changes in proportion). Current-year pension expense is the balancing amount.
4. Add contributions after the measurement date. Employer contributions paid after the measurement date and before year end are a deferred outflow. They reduce the liability in the next year.
5. Split by activity. Allocate each amount to governmental activities and each enterprise fund using the documented basis, usually each activity's share of contributions.
6. Record the entries. Enterprise funds record their share in their own ledgers. Governmental activities record theirs in the government-wide conversion ledger (CACOA fund 980), not in the general fund; governmental funds report only the contributions paid.
7. Tie out. Beginning plus current-year activity equals ending, for the liability and each deferral, by activity. Next year's beginning balances should equal this year's endings; show that check explicitly.
8. Save the support with the plan report, the allocation, and the tie-out, so next year starts from a documented base.

What good looks like

• Beginning balances equal audited balances, by activity.
• Contributions after the measurement date are a deferred outflow, not an expense.
• The enterprise share appears once, in the enterprise fund.
• FTR form 40 (governmental) and form 38 (enterprise) show the same balances as the audited statements.

CACOA codes involved

Net pension liability (2231), net pension asset (1350), deferred outflows related to pensions (1900), deferred inflows related to pensions (2800), and retirement contributions (4100).