NEWS RELEASE 09/01/10
FASB Issues Proposed Accounting Standards Update to Improve Disclosure about
Entities Participating in Multiemployer PlansNorwalk, CT, September
1, 2010—The Financial Accounting Standards Board (FASB) has issued an
Exposure Draft of a proposed Accounting Standards Update (Update) intended to
increase transparency in financial reporting about entities that participate in
multiemployer pension and other postretirement benefit plans.
proposed Update sets forth proposed disclosures that the Board believes would
help users of financial statements better assess the potential risks faced by
employers participating in multiemployer plans. A recent study of over 100
multiemployer plans, including the largest plans in the country (as measured by
assets), indicated that in 2008 those plans were collectively underfunded by
over $160 billion (approximately 44% of their collective plan liabilities).
Current U.S. GAAP requires employers to disclose their total contribution to
multiemployer plans, but there is no requirement to describe the funding status
of these plans. Under the proposed guidance, employers would have to provide
more information, including a description of the plans in which the employer is
involved, the employer’s contractual commitments to the plans, and the expected
impact of participating in the plans on the employer’s future cash flows
(including the potential impact of plan withdrawal
“Investors and other financial statement users have
expressed concern that current financial statements do not provide enough
information about the commitments and potential risk related to multiemployer
pension arrangements,” states FASB member Leslie Seidman. “We encourage our
constituents to review and provide comment on the Board’s suggestions for
expanding disclosure in this area, one that has gained greater urgency as a
result of the recent financial crisis and underfunding of many such
If approved, the proposed Update would require a public company
to provide the enhanced disclosures for fiscal years ending after December 15,
2010, and in subsequent fiscal years.
A nonpublic company would be
required to provide the enhanced disclosures for fiscal years beginning on or
after December 15, 2010, and in subsequent fiscal years (one year later than a
The comment period for the proposed Update extends
through November 1, 2010. The Exposure Draft is available at www.fasb.org.
the Financial Accounting Standards Board
Since 1973, the
Financial Accounting Standards Board has been the designated organization in the
private sector for establishing standards of financial accounting and reporting.
Those standards govern the preparation of financial reports and are officially
recognized as authoritative by the Securities and Exchange Commission and the
American Institute of Certified Public Accountants. Such standards are essential
to the efficient functioning of the economy because investors, creditors,
auditors, and others rely on credible, transparent, and comparable financial
information. For more information about the FASB, visit our website at www.fasb.org.