J. Richard Hogue, FSA, MAAA, EA
Actuaries spend a considerable amount of time discussing how best to define the measurement and valuation dates. There are some important factors that employers and their auditors need to consider. This topic becomes particularly important when a government agency changes actuaries.
Three important dates under GASB 75
- Financial reporting date – normally the last day of the employer’s fiscal year
- Measurement date – The date as of which the net OPEB liability is measured. For GASB 75, it may be the employer’s fiscal year end or any date consistently applied which is not earlier than the employer’s prior fiscal year end. (For GASB 74, which sets the standards for OPEB plan reporting, the measurement date must be the plan’s fiscal year end. While not required to be the same, certain complexities are likely to arise if the employer’s measurement date under GASB 75 is not the same as the measurement date for the plan under GASB 74).
- Valuation date – The date as of which an actuarial valuation is performed and is restricted as follows for employer reporting:
- it must be as of a date that is no more than 30 months and 1 day prior to the employer’s fiscal year end, and
- it must not be more than 24 months after the prior valuation date
Significance of the Measurement Date
Of these three dates, it’s the measurement date that needs the most attention by the government agency since it will affect when the actuary can finalize the information required for GASB 75 reporting. The measurement date is considered an accounting principle and is restricted by the first sentence of paragraph 74 of GASB 62 which states “The presumption that a government should not change an accounting principle may be overcome only if the government justifies the use of an alternative acceptable accounting principle on the basis that it is preferable.”
If the measurement date for the FYE 6/30/20 financial statement was 6/30/19, it would be acceptable to use a 6/30/21 measurement date for the FYE 6/30/21 financial statement because it would result in reporting more current information. Had the measurement date for the FYE 6/30/20 financial statement been 6/30/20, it would not be acceptable to use a 6/30/20 measurement date for the FYE 6/30/21 financial statement as this would result in reporting less current information than the prior year. The following chart illustrates this: