Under the GASB standards, how should OPEB liabilities be measured?

The measurement of Other Post-Employment Benefits (OPEB) liabilities under Governmental Accounting Standards Board (GASB) standards requires that these liabilities reflect their present value based on expected future obligations. Specifically, OPEB liabilities should be measured at discounted future cash flows. This involves estimating the future benefit payments associated with OPEB and then discounting these amounts back to their present value using an appropriate discount rate, which reflects the time value of money. This approach provides a more accurate and realistic view of the entity's obligations as it accounts for when those cash flows will occur and what they are worth in today's terms.

Measuring liabilities at fair value does not align with the specific requirements set out for measuring OPEB under GASB, as fair value typically pertains more to financial instruments and not obligations for post-employment benefits. Timing of payment does not capture the full scope of liability, as OPEB obligations might not reflect just the payment timeline but rather the entire stream of future benefits. Assessing current funding value would ignore the necessary adjustments for future benefit costs and the discounting process that GASB mandates. Thus, the option indicating a measurement at discounted future cash flows is the most appropriate and compliant with GASB standards for OPEB