Implementation of Financial Accounting Standards Board Statement Number 106, Entitled: "Employers' Accounting for Postretirement Benefits Other Than Pensions

EXECUTIVE SUMMARY:

This final report summarizes the results of our review of the implementation of Financial Accounting Standards Board Statement Number 106 (FASB 106) relating to postretirement costs. The FASB 106 requires an accounting change from the cash basis of accounting to accrual basis for costs associated with retirees' health benefits. We found one hospital's cash basis costs for retirees' health benefits was $3 million annually. However, by implementing accrual basis accounting under FASB 106, this hospital reported a $15 million accrual for postretirement health benefits on its Fiscal Year 1991 financial statements and Medicare cost report.

---