The Financial Accounting Standards Board (FASB) appears to be heading in the right direction in its reconsideration of its proposal to update accounting standards concerning disclosure of an employer’s participation in a multiemployer plan. Â
At a May 31 meeting, FASB tentatively adopted a compromise disclosure standard proposed by the Construction Industry FASB Coalition (CIFC). AGC is a member of the CIFC, which has been working closely with FASB to help the Board achieve its goal of greater transparency but without the severe consequences for construction firms and benefit plans inherent in FASB’s original proposal, .
AGC and CIFC’s chief concern about Exposure Draft 715 is its requirement that employers disclose an estimate of withdrawal liability. At the May 31 meeting, FASB members held a lengthy discussion of possible alternatives to such a disclosure identified by FASB staff. By a thin margin, the Board tentatively adopted the CIFC-supported alternative and the following principles regarding quantitative disclosures:
- An employer would not be required to disclose the estimated withdrawal liability. Instead, an employer would disclose the following for each multiemployer plan for which contributions are individually material in relation to the employer’s participation in such plans:
- Legal name of the plan
- Employer Identification Number of the plan
- As of the date of each annual balance sheet presented, the most recent certified zone status, as required by the Pension Protection Act of 2006, if available. Â If zone status is not available, an employer should disclose whether the plan was:
- Less than 65 percent funded
- Between 65 percent and 80 percent funded, or
- Greater than 80 percent funded.
- Whether a funding improvement plan or rehabilitation plan had been implemented or was pending
- For each annual period that an income statement is presented, contributions made to the plan
- Whether the entity paid a surcharge to the plan
- The expiration date of the plan’s associated collective-bargaining arrangement, if any, and
- Whether the employer’s contributions represent more than 5 percent of total contributions to the plan.
- For each annual period for which an income statement is presented, an employer would disclose the total contributions made to all multiemployer plans and:
- The contributions made to each individually material plan (see item 1 above)
- The total contributions made to all other plans in the aggregate.
- An entity would not be required to provide the following disclosures proposed in the Exposure Draft:
- The number of multiemployer plans in which the employer participates
- The total assets and the accumulated benefit obligation of multiemployer plans
- The contributions to a plan as a percentage of total contributions
- The percentage of employer’s employees that are covered by multiemployer plans
- Supplemental information about the plans in which the information about the withdrawal liability is not available.