Describe some of the major reconciling items between a government fund and the government-wide financial statements.
Business Ethics
GASB 45 requires that the expected future costs of retiree health costs be recognized in the current period. Prior to this, governments used a pay-as-you-go plan in which only the current year”s actual payments affected the financial statements.
Suppose you are working for a government prior to the issuance of GASB 45. As part of the collective bargaining agreement, the government offers employees increased health benefits.
- Prior to the issuance of GASB 45, what would be the impact on the government”s financial statements?
- Under GASB 45, what are the financial statement implications?
- Why might the current governmental leaders agree to offer such a benefit?
- What are the ethical issues involved in this decision?