{"id":267,"date":"2010-05-12T08:13:11","date_gmt":"2010-05-12T13:13:11","guid":{"rendered":"http:\/\/pensionblog.com\/?p=267"},"modified":"2010-05-12T08:13:11","modified_gmt":"2010-05-12T13:13:11","slug":"an-alternative-to-the-gasb-45-amm","status":"publish","type":"post","link":"https:\/\/viaactuarial.com\/2010\/05\/12\/an-alternative-to-the-gasb-45-amm\/","title":{"rendered":"An Alternative to the GASB 45\u00a0AMM"},"content":{"rendered":"

Many small cities and governmental entities (less than 100 employees) are still figuring out their GASB 45 liability or whether they even have a liability. GASB\u2019s Alternative Measurement Method (AMM) is a simplified alternative to performing a full actuarial valuation, but even the AMM has a cost that some very small entities would prefer to minimize. This post describes a potential alternative to the AMM.<\/p>\n

Consider the following situation for a small city:<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Fewer than 20 employees<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Only have potential \u201cimplicit subsidy\u201d liability (i.e., allow early retirees to stay on active health plan and pay active premiums, but no direct subsidies)<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Currently have no retirees on the health plan and don\u2019t expect any retirees in the near future to continue health coverage prior to Medicare eligibility.<\/p>\n

In this situation, an AMM valuation would likely result in $0 liability. The city\u2019s auditor might request this one-time AMM so that they have documentation about how they determined that the city\u2019s GASB 45 liability was immaterial.<\/p>\n

I\u2019d also like to highlight an even lower cost GASB 45 option; what I call the AAMM (the Alternative to the Alternative Measurement Method). If it is acceptable to the auditor, what we can do is develop a rough estimate of the potential GASB 45 liability for the city using comparative data we have collected over the course of many AMM valuations.<\/p>\n

The actuary then writes a short letter which describes the liability estimate so that the auditor has documentation they can put in their files. This shows that an expert has reviewed the GASB 45 liability issue and the auditor has a basis for determining that the liability is immaterial. The end result is the same as the AMM scenario (i.e., the auditor has a basis for deciding the GASB 45 liability is immaterial), but an AAMM letter usually costs a fraction of preparing an AMM valuation.<\/p>\n

A couple of follow-up thoughts:<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The AAMM is NOT an actuarial valuation and is only meant to give a rough estimate of potential GASB 45 liability.<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 You could do something similar with the various GASB 45 estimators out on the web<\/a>, but the AAMM has the advantage of a letter signed by an actuary.<\/p>\n

\u2013\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Your auditor may offer to do a similar analysis, but this raises the question of independent audits and who is auditing their work?<\/p>\n","protected":false},"excerpt":{"rendered":"

Many small cities and governmental entities (less than 100 employees) are still figuring out their GASB 45 liability or whether they even have a liability. GASB\u2019s Alternative Measurement Method (AMM) is a simplified alternative to performing a full actuarial valuation, but even the AMM has a cost that some very small entities would prefer to […]Read More… from An Alternative to the GASB 45\u00a0AMM<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13,16,17],"tags":[78,15,18],"acf":[],"yoast_head":"\nAn Alternative to the GASB 45\u00a0AMM - Via Actuarial Solutions<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/viaactuarial.com\/2010\/05\/12\/an-alternative-to-the-gasb-45-amm\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"An Alternative to the GASB 45\u00a0AMM - Via Actuarial Solutions\" \/>\n<meta property=\"og:description\" content=\"Many small cities and governmental entities (less than 100 employees) are still figuring out their GASB 45 liability or whether they even have a liability. 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