FASB Streamlines Accounting for Employee Benefit Plans
The Financial Accounting Standards Board has issued a three-part accounting standards update for employee benefit plans accounting as part of its efforts to simplify the accounting rules.
Earlier standards for defined contribution benefit plans and health and welfare benefit plans required fully benefit-responsive investment contracts to be measured at contract value, along with an adjustment to reconcile contract value to fair value, when these measures differ, on the face of the plan financial statements.
Some stakeholders, however, suggested that requiring, for purposes of presentation and disclosure, fully benefit-responsive investment contracts to be measured at fair value does not provide decision-useful information when fair value differs from contract value. A statement of position from the American Institute of CPAs asserted that contract value is the relevant measure for those contracts because that is the amount participants normally would receive if they were to initiate permitted transactions, such as withdrawals, under the terms of the underlying plan. Those contracts also are reported at contract value for regulatory reporting. Read more on Accounting Today.