What is the primary purpose of GASB Statement 68?

The primary purpose of GASB Statement 68 is to improve accounting and reporting for defined-benefit pension plans. This statement was developed by the Governmental Accounting Standards Board (GASB) to provide clearer and more consistent information regarding pension liabilities and expenses in governmental financial statements.

By requiring governments to recognize the long-term obligations of pension benefits in their financial statements, GASB Statement 68 enhances transparency and provides users of financial statements with relevant information. This is especially important because it allows stakeholders to better understand the financial health of a government entity regarding its pension obligations.

The focus on defined-benefit pension plans is critical, as these plans are often complex and can involve significant future liabilities. Recognizing these obligations in the financial statements helps ensure that governments are presenting a more accurate picture of their fiscal position, which is essential for sound financial management and reporting.