Summary of the November Meeting of the Emerging Issues Task Force
This EITF Snapshot summarizes the November 17, 2016, meeting of the Emerging Issues Task
Force (EITF or “Task Force”). Initial Task Force consensuses (“consensuses-for-exposure”)
are exposed for public comment upon ratification by the Financial Accounting Standards
Board (FASB). After the comment period, the Task Force considers comments received and
redeliberates the issues at a scheduled meeting to reach a final consensus. Those final
consensuses are then provided to the FASB for final ratification and, ultimately, issuance as an
Accounting Standards Update (ASU).
The FASB plans to consider the EITF’s November 2016 consensuses for ratification at its
November 30, 2016, meeting. After that date, the official EITF minutes, including the results
of the FASB’s ratification process, will be posted to the Deloitte Accounting Research Tool
(DART) and to the FASB’s Web site (note that the official EITF minutes may contain details that
differ from those in this publication). EITF Issue summaries (released before the meeting and
used to frame the discussion) are also available on those sites.
Issue 16-B, “Employee Benefit Plan Master Trust Reporting”
Status: Final consensus.
Affects: Employee benefit plans that hold investments in master trusts.
Background: Many employee benefit plans hold investments in master trusts. Master
trusts hold assets for multiple plans of either a single employer or group of employers under
common control. A plan’s interest in a master trust may be through an undivided interest (a
proportionate interest in the net assets of the master trust) or a divided interest (a specific
ownership interest in individual investments of the master trust). Because plan interests in
master trusts are becoming more common, additional presentation and disclosure guidance
on interests in such trusts is needed.
In July 2016, the FASB issued a proposed ASU based on the consensus-for-exposure that the
EITF reached on five subissues at its June 2016 meeting. For a summary of this consensus-for
exposure, see Deloitte’s June 2016 EITF Snapshot.
Summary: At this meeting, the Task Force discussed the comment letters received on the
proposed ASU, reaffirming its consensus-for-exposure related to the following three subissues
(while making minor revisions to those subissues when applicable): (1) presentation within the
plan’s financial statements of its interest in a master trust as a single line item, (2) disclosure
of the master trust’s other assets and liabilities and the balances related to the plan, and
(3) elimination of required disclosures for Section 401(h) accounts that are already provided
by the associated defined benefit plan.
The Task Force also affirmed its decision that for a plan’s divided interest in a master trust, the
master trust’s investments should be disclosed by general type as well as by the dollar amount
of the plan’s interest in each type. However, the Task Force changed its previous decision
on disclosures for plans with undivided interests. Under the proposed ASU, a plan with an
undivided interest would be required to disclose, by general type of investment, the master
trust’s investments but not the dollar amount of the plan’s interest. On the basis of feedback
noting this inconsistency, the Task Force decided to require a plan that holds either a divided
or undivided interest in a master trust to disclose, by general type of investment, the dollar
amount of its interest in the master trust.
The Task Force decided not to address disclosures regarding the master trust’s underlying
investments (e.g., disclosures required by ASC 8201 and ASC 815); thus, the Task Force did not
affirm its previous consensus-for-exposure that further disclosures were not required. Plans
with interests in master trusts may continue to refer to the AICPA Audit and Accounting Guide2 on employee benefit plans and TIS Section 6931.113 for current practice related to such
disclosures.
For a summary of the EITF’s tentative decisions on the primary subissues, see the appendix.
Effective Date and Transition: For all employee benefit plans, the guidance related to the
final consensus will be effective for fiscal years beginning after December 15, 2018. Early
adoption is permitted. A reporting entity will apply the guidance retrospectively to all periods
presented.
Next Steps: FASB ratification is expected at the Board’s November 30, 2016, meeting, after
which a final ASU will be issued.
Administrative Matters
At this meeting, the SEC staff observer made an announcement that the staff is conforming
the guidance on tax benefits resulting from investments in affordable housing projects (SEC
staff observer comment codified in ASC 323-740-S99-2) to the guidance in ASU 2014-01.4 As a
result, the amended guidance will state:
It has been observed that the decision to apply the proportional amortization method of accounting
is an accounting policy decision to be applied consistently to all investments in qualified affordable
housing projects that meet the conditions in paragraph 323-740-25-1 rather than a decision to be
applied to individual investments that qualify for use of the proportional amortization method. The
SEC staff believes that it would be inappropriate to extend the proportional amortization method of
accounting to situations analogous to those described in paragraph 323-740-05-3.
The primary effect of this announcement is to change the reference in the SEC staff observer
comment from the “effective yield method” to the “proportional amortization method,” which
is consistent with ASU 2014-01. This change is not expected to affect practice for entities that
have adopted ASU 2014-01.
The next EITF decision-making meeting is tentatively scheduled for March 16, 2017. At that
meeting, the EITF is expected to discuss the comments received on Issue 16-C.5
Appendix — Summary of Tentative Decisions About Issue 16-B
Master Trust Issue | Consensus-for-Exposure | Final Consensus |
|---|---|---|
Presentation of master trust
balances and activity on the face
of the plan’s financial statement | When an employee benefit plan has investments in a
master trust, the plan must present its interest and the
change in its interest as single line items in the plan
financial statements. | Affirmed the
consensus-for-exposure. |
Disclosure for plans with
interests in master trusts | A plan with divided interests in master trusts would be
required to disclose both the master trust investment
balances by general type of asset and the individual
plan’s interest in those balances. A plan with undivided
interests would be required to disclose the master
trust investment balances by general type and only the
plan’s total interest in the investments. | Revised the previous decision to
require that all plans with interests
in master trusts (both divided and
undivided) disclose both the total
master trust investment balances
by general type of asset and the
individual plan’s interest in those
balances. |
Disclosure of the master trust’s
other assets and liabilities | A plan would disclose other assets and liabilities of the
master trust and those related to the individual plan. | Affirmed the
consensus-for-exposure. |
Section 401(h) account
investment disclosures | The requirement to disclose Section 401(h) account
assets in a health and welfare plan when they are
already included in the notes of the associated defined
benefit plan would be eliminated; instead, health
and welfare plans would be required to provide the
name of the defined benefit plan in whose financial
statements the disclosures are provided. | Affirmed the
consensus-for-exposure. |
Footnotes
1
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB
Accounting Standards Codification.”
2
AICPA Audit and Accounting Guide, Employee Benefit Plans.
3
AICPA Technical Practice Aids, TIS Section 6931.11, “Fair Value Measurement Disclosures for Master Trusts.”
4
FASB Accounting Standards Update No. 2014-01, Accounting for Investments in Qualified Affordable Housing Projects — a consensus of
the FASB Emerging Issues Task Force.
5
EITF Issue No. 16-C, “Determining the Customer of the Operation Services in a Service Concession Arrangement.”