FASB nonpublic EBP vote meant to guard private companies’ proprietary information

BY KIM NILSEN

FASB on Wednesday voted to indefinitely defer certain disclosures about investments held by a nonpublic employee benefit plan (EBP) in the plan sponsor’s own equity securities.

Stakeholders have expressed concerns to FASB that certain disclosure requirements for nonpublic EBPs would reveal sensitive proprietary information of private companies.

FASB in the next few weeks will issue an Accounting Standards Update, Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04, reflecting the change. The deferral will be effective upon issuance for all financial statements that have not yet been issued.

The indefinite deferral applies to disclosures of certain quantitative information about the significant unobservable inputs used in Level 3 fair value measurement for investments held by certain employee benefit plans, according to a FASB press release. The deferral applies specifically to EBPs—other than those plans that are subject to SEC filing requirements—that hold investments in their plan sponsors’ own nonpublic entity equity securities, including equity securities of their nonpublic affiliated entities.

Kim Nilsen ( knilsen@aicpa.org ) is the JofA’s executive editor.

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