Ways to simplify the measurement and disclosure requirements for employee benefit plans were discussed during a recent meeting of the FASB’s Emerging Issues Task Force (EITF). The EITF reached several consensuses-for-exposure.
- Fully benefit-responsive investment contracts would be measured at contract value, and plans would no longer be required to reconcile contract value to fair value if the two amounts differed.
- Plan assets would be disclosed by general type on either the face of the financial statements or in the notes, and plans would not be required to disaggregate plan assets based on the guidance in FASB Accounting Standards Codification® (ASC) 820. Self-directed brokerage accounts would be considered one “general type” of asset.
- Plans would no longer be required to disclose individual plan assets in excess of 5% of net assets available for benefits, and plans that file Form 5500 with the U.S. Department of Labor as direct filing entities would not be required to provide the investment strategy disclosures under ASC 820 for investments measured using the net asset value practical expedient.
- The requirement to disclose net appreciation or depreciation by general type of investment would be eliminated.
- Plans would be permitted to measure plan assets on a date near the plan’s year-end when the end of the fiscal period does not coincide with the end of a month. Plans that use this practical expedient would be required to disclose the measurement date and the financial effects of contributions, distributions and significant events occurring between the measurement and reporting dates.
The proposed measurement date practical expedient would be applied prospectively. Other proposed guidance would require retrospective application.