The Federal Accounting Standards Advisory Board has published Preliminary Views toward amending its Statement of Federal Financial Accounting Standards No. 17, Accounting for Social Insurance (included in the FASAB’s massive Statements of Federal Financial Accounting Concepts and Standards) to accelerate the government’s recognition of expense and liabilities for social insurance programs, including Social Security, Medicare, and Railroad Retirement. (FASAB Issues Preliminary Views Regarding Accounting for Social Insurance, News Release)
The Preliminary Views present two opposing approaches, a majority Primary View and a minority Alternative View:
- Primary View – Expense would be recognized when participants in a social insurance program become fully insured, then as benefits increase due to additional work in covered employment by fully insured individuals. For example, under Social Security, expense would be reported for an individual upon completion of 40 quarters of work in covered employment, and a liability for accumulated unpaid expense would be recognized.
- Alternative View – Expense and liability would continue to be measured and recognized according to current rules under SFFAS 17, upon satisfaction of all eligibility criteria for benefit entitlement, when benefits become due and payable.
Written comments are requested by April 16, 2007 (although the press release gives April 18 as the comment deadline).