FASB changes employee benefit plan accounting

Three-part document is designed to reduce complexity.

FASB provided guidance designed to simplify accounting for employee benefit plans in a three-part document.

The guidance is contained in Accounting Standards Update (ASU) No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (consensuses of the Emerging Issues Task Force).

Part I of the ASU designates contract value as the only required measure for fully benefit-responsive investment contracts and applies only to reporting entities within the scope of Topics 962 and 965 that classify investments as fully benefit-responsive investment contracts.

In Part II of the ASU, FASB eliminated certain disclosures that previously were required for participant-directed investments and nonparticipant-directed investments. In Part III of the ASU, FASB established a practical expedient to permit plans to measure investments and investment-related accounts as of a month-end date that is closest to the plan's fiscal year end, when the fiscal period does not coincide with a month end.

The amendments in each part of the ASU take effect for fiscal years beginning after Dec. 15, 2015, with earlier application permitted. The amendments in Parts I and II should be applied retrospectively for all financial statements presented. The amendments in Part III should be applied prospectively.

SPONSORED REPORT

Why cybercriminals are targeting CPAs

This free report expands on the most commonly found scams, why education and specialized IT knowledge help to lessen security vulnerabilities, and why every firm should plan carefully for how it would respond to a breach.

PODCAST

How tax reform — and Excel — are changing the CPA Exam

Mike Decker, the vice president of examinations at the AICPA, discusses changes being made to the exam as a result of tax reform — and about how Excel will now be available for use on the test.