FASB Proposes Improvements to Pension Accounting

The Financial Accounting Standards Board (FASB) has issued an Exposure Draft, Employers’ Disclosures about Pensions and Other Postretirement Benefits that would improve financial statement disclosures for defined benefit plans. The project was initiated by the FASB earlier this year in response to concerns raised by investors and other users of financial statements about the need for greater transparency of pension information. The proposed change would replace existing FASB accounting guidance.

To provide the public with better and more complete information, the FASB plans to require that companies provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information. “The proposed disclosures will provide investors with greater visibility into plan assets and a clearer picture of cash requirements for benefit payments and contributions to fund pension and other postretirement benefit plans,” said FASB Project Manager Peter Proestakes.

For the first time, companies would be required to provide financial statement users with a breakdown of plan assets by category, such as equity, debt and real estate. The expected rates of return and target allocation percentages, or target ranges, for these asset categories also would be required in financial statements.

Cash flows would include projections of future benefit payments and an estimate of contributions to be made in the next year to fund the pension and other postretirement benefit plans.

In addition to expanded annual disclosures, the FASB seeks to improve the information available to investors in interim financial statements. Companies would be required to report the various elements of pension and other benefit costs on a quarterly basis.

The proposed guidance would be effective for fiscal years ending after December 15, 2003, and for the first fiscal quarter of the year following initial application of the annual disclosure requirements.

The Exposure Draft may be accessed from the FASB’s website.

You may like these other stories...

Deal to lock in US tax cuts is bubbling up on the HillSome US lawmakers are exploring a post-election deal that would lock in permanent tax cuts for major corporations and low-income families, Richard Rubin of Bloomberg...
Read more from Larry Perry here and in the Today's World of Audits archive.This article discusses basic accounting principles for operating expenses under the FRF for SMEs. Part 2 will address basic auditing procedures....
Judge dismisses AICPA lawsuit against the IRSMichael Cohn of Accounting Today reported on Tuesday that a federal judge has dismissed a lawsuit against the IRS by the American Institute of CPAs (AICPA) over its new program...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.
Nov 19How do you minimize redundant work and unnecessary steps to maximize the amount of work moving through your firm?