Q: Poll Question 4 mentions net pension liability on the fund accounting balance sheet. I thought net pension liability is never included on a fund accounting balance sheet, whether it is payable in the next 60 days or not. So, if net pension liability is due in the next 60 days, I could expect to find it in the balance sheet? Thank you.
A: In theory, yes. If any liabilities within the net pension liability is due and payable withing 60 days, it would be included on a fund accounting balance sheet. Note, however, that the “Net Pension Liability” reported in the “Governmental Activities” column in the Statement of Net Position on Page 15 records $6,641,154 for this line item as “Noncurrent Liabilities”. That, in turn, suggest that no amount in that net balance will be paid down in the coming period. As a result, we would not expect to see any of the $6,641,154 on a strictly funds accounting balance sheet.
Page17 provides a strictly funds accounting balance sheet for Governmental Activities. Note that no amount is recorded on this balance sheet under “Liabilities” since all liabilities on this balance sheet are due to be paid down in the very short tun.
If a “Net Pension Liability” balance were allocated between “Current Liabilities” and “Noncurrent Liabilities” on Page 15, we would expect some of the current balance to be recorded on the strictly fund accounting balance sheet on Page 17.
Course overview: Fund Accounting and Municipality Analysis: Part I of II