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VILLAGE OF ABC, FLORIDA SCHEDULE ()~ FINDINGS AND QUESTIONED COSTS (Conlinued) OPEB expenditures for governmental funds should be recognized on the modified accrual basis. The amount recognized should be equal to the amount contributed to the plan or expected to be liquidatcd with expcndable available resources. Essentially, there is no change from current practice for governmental funds. However, for government-wide financial statements, the accmal basis must be used. The accrual method wi II rcqu ire the calculations to be made using actuarial computations and wi II resu It in the recognition of a present value liability which mcasures the value of OPEB benefits earned by cmployees during thcir tenure with the government and likely to be paid upon retiremcnt. This calculation will result in substantial amounts, due to the current cost of such benefits and their escalating costs. It should also be emphasizcd that thel'e is no requirement to fund these bencfits with current rcsources. The Statement mercly requires the reporting of the value of thc benefit primarily in the government-wide financial statements. The computations can be cxtremely complcx and the use of an actuary will invariably be required. An alternative measurement mcthod exists for a sole employcr in a plan with fewcr than one hundred total plan mcmbers (including employees in activc scrvice, terminated employces who havc accumulated benefits but are not yct receiving them, and retirees and bencficiaries currently recciving bcnefits) has the option to apply a simplified alternative ml'aslIreml'ntlllcthot! instead of obtaining actuarial valuations. This alternative method includes the same broad measurement steps as an actuarial valuation (projecting futurc cash outlays for benefits, discounting projected benefits to present value, and allocating thc prcsent value of benefits to periods using an actuarial cost method). However, it permits simplification of ccrtain assumptions to make the mcthod potentially usable by nonspccialists. Thc Statement would permit prospective implementation, that is, employers would be permitted to set the beginning net OPEB obligation at zero as of the beginning of the initial year. Implcmentation would occur in three phases based on the government's total annual revenues in the first fiscal year ending after June 15, 1999. The definitions and cutoff points for that purpose otherwise would be the same as in GASB's Statemcnt No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments. For the District, this Statement is effective for the fiscal year ended September 30, 2009. Rccom mcueill/iou The contents of this statement are highly complex and will rcquire significant lead time to implcment on thc respectivc implemcntation date. We would suggest that the Town obtain a thorough understanding of the requircments and initiate planning for implementation in a prudent manncr. -5-