This publication highlights some of the important accounting considerations related to the calculations and disclosures entities provide under U.S. GAAP1 in connection with their defined benefit pension and other postretirement benefit plans. Many of these considerations have been included in prior Financial Reporting Alert newsletters and are summarized below. In the current year, emerging issues and disclosure items include (1) the effects of coronavirus disease 2019 (“COVID-19”) and (2) public entities’ adoption of ASU 2018-14,2 which addresses changes to disclosure requirements related to defined benefit plans.
The views presented in this publication are specific to U.S. GAAP. For entities that use another reporting framework, such as IFRS® Standards, preparers are encouraged to discuss the accounting implications with their advisers as appropriate.
FASB Accounting Standards Update (ASU) No. 2018-14, Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans.
For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s “Titles of Topics and Subtopics in the FASB Accounting Standards Codification.”
The SOA is a leading provider of actuarial research, and its mortality tables and mortality improvement scales are considered by many plan sponsors as a starting point for developing their mortality assumptions.
As defined in ASC 715-30, the “expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets.”
PCAOB Auditing Standard No. 2501, Auditing Accounting Estimates, Including Fair Value Measurements.
Corporation Finance Disclosure Guidance (CFDG) Topic 9, “Coronavirus (COVID-19).”
Corporation Finance Disclosure Guidance Topic 9A, “Coronavirus (COVID-19) — Disclosure Considerations Regarding Operations, Liquidity, and Capital Resources.”