Headlines about "Accounting for benefits, incl. FASB, GASB"
Gathered from the web by the editors at BenefitsLink.com.
West Virginia Senate Committee Votes Down Retiree Health Benefit Proposal
Excerpt: "Legislation to freeze the state's gas tax at its current rate, and to allow cities to close out critically underfunded police and firefighter pension funds are on track for passage, as a brief special legislative session enters its third day Thursday. However, one piece of Gov. Joe Manchin's special session agenda was in trouble Wednesday: a proposal to give school boards and other local governments a one-year reprieve from having to carry massive unfunded liabilities for future retiree health benefits on their financial books. Backers of the legislation (HB405, SB4405) believe it would benefit county school boards that will be selling bond issues next year in order to draw down federal economic stimulus funds for school construction and renovation." (The Charleston Gazette)
[Guidance Overview] Massachusetts High Court Rules That ERISA Preempts a Claim Based on Unjust Enrichment
Excerpt: "In Hitachi High Technologies America, Inc. v. Bowler, SJC-10386 (Supreme Judicial Court of Massachusetts 2009), the Court faced the question of whether ERISA preempts a State law action brought by a retirement plan fiduciary to recover money mistakenly paid to a plan participant. In this case, the plaintiff, Hitachi High Technologies America, Inc. (Hitachi), filed an action for unjust enrichment in the Mass. Superior Court against its former employee, the defendant Kevin Bowler, for his alleged failure to reimburse $29,315.75, with interest, in retirement benefits that Hitachi had overpaid to Bowler due to an accounting error. The lower court dismissed the case on the grounds that it lacked subject matter jurisdiction." (Passion for Subro)
Practice Note on Current and Emerging Practices in Selection and Documentation of Mortality Assumptions for Pensions (PDF)
Excerpt: "Measurements of defined benefit pension plan obligations include calculations that assign plan costs to time periods, actuarial present value calculations, and estimates of the magnitude of future plan obligations. This practice note does not apply to individual benefit calculations or individual benefit statement estimates. The application of the information contained herein is intended to cover qualified and non-qualified plans, and governmental and non-governmental plans where the actuary is subject to ASOP No 35. This note may be used when setting assumptions, or providing advice on setting assumptions, for funding (where permitted by law) and for financial accounting." (American Academy of Actuaries)
IASB Rescinds Discount Rate Proposal for Pensions and Other Retiree Benefits
Excerpt: "IASB has rescinded planned amendments to IAS 19, Employee benefits, that would have required all companies to determine discount rates for valuing pension, retiree health and other post-employment benefits from high-quality corporate bond yields. Companies in countries without deep corporate bond markets currently use government bond yields, resulting in reporting inconsistencies. The board halted the project Oct. 22, after weighing the positives (improved global consistency) against the negatives (subjectively determined discount rates due to lack of country-specific data points)." (Mercer LLC)
[Guidance Overview] Final Regs on Benefit Restrictions for Underfunded Plans, Measurement of Plan Assets and Liabilities
Excerpt: "Underfunding presumptions: The regulations set forth a series of presumptions that are used to apply the Code Sec. 436 benefit limitations in situations where the plan's enrolled actuary has not yet issued a certification of the plan's AFTAP for the plan year and that describe the interaction of the application of those presumptions on plan operations with plan operations after the plan's enrolled actuary has issued a certification of the plan's AFTAP for the plan year. The rules in the final regulations have been revised from those in the proposed regulations." (Wolters Kluwer)
Virginia Retirement System Defers Accounting Rule to Cut Costs
Excerpt: "The board of the Virginia Retirement System agreed to an accounting change that will save the government from large contribution rate increases to fund the plan for state employees, teachers, and other public employees. The Richmond Times-Dispatch reports that the Board of Trustees voted unanimously to suspend an accounting rule that requires the state to fund the retirement plan within 20% of its fair market value. Without the change, the state would have had to raise its contribution rate for state employees and public school teachers by almost 50%." (PLANSPONSOR.com; free registration required)
[Opinion] Five Major Public Pension Problems: One Simple Solution
Excerpt: "Unsolvable Problems: Expecting 8% returns in a 4% world. When 30 year treasury bonds are yielding 4%, the dividend yield of the S&P 500 is 2%, and the S&P 500 PE is 140 (26 if you use operating earnings), 8% returns are from Fantasyland. Pension benefits start too early. People are living longer. Private employees do not receive these kind of benefits. Public employees should not either, especially at taxpayer expense. Indeed, continuing to chase high-yield in a low-yield world is a guarantee those plans will blow up again down the road. Pension plans are so underfunded that it is virtually impossible to catch up, no matter what risks the plan managers undertake. When asked how long it would now take for its investments to put the fund back on track, Ohio officials simply said: 'Infinity.'" (Mike Shedlock)
[Opinion] The Real Problem with Public Employee Pensions
Excerpt: "The Washington Post reports today ('Steep Losses Pose Crisis for Pensions') on the sorry state of funding in state and local employee pensions, focusing on the impact of recent poor stock returns. While a poor investment climate certainly hasn't helped, it's not the biggest reason public employee funds are in bad shape. A bigger reason the plans are underfund is that, in effect, we told them they can be. State and local pension plans use different and far less demanding accounting rules than do corporate pensions, even though public employee benefits are guaranteed by law while corporate pension benefits are not. The key issue is how to 'discount' future benefit obligations to the present, which tells us how much plans must have on hand today to fund their future liabilities. A high discount rate lowers the present value of a future obligation, while a low discount rate implies a higher present value." (American Enterprise Institute)
[Guidance Overview] IRS Permits Switchback to Smoothed Interest Rates for 2010
Excerpt: "The IRS recently provided guidance allowing pension plan sponsors the freedom to select a different yield curve basis for 2010 valuations from what is used for 2009. Here we explain why this is great news for plan sponsors and which options most sponsors should avail themselves of." (JPMorgan Chase & Co.)
[Opinion] Pension Accounting Committee Comments Concerning Exposure Draft 2009/10, Discount Rate for Employee Benefits (Proposed Amendments to IAS 19) (PDF)
2 pages. Excerpt: "Because Academy members' practice primarily involves financial reporting under the standards of the Financial AccountingStandards Board, rather than the IASB, we have limited our comments to those areas where our experience might be relevant to the board's deliberations or where there is an opportunity to further the goal of converging standards." (American Academy of Actuaries)
[Opinion] American Benefits Council Comment Letter to SEC on FBAR Issues (PDF)
3 pages. Excerpt: "The American Benefits Council (the 'Council') is writing to urge guidance with respect to foreign financial account reporting (Form TD F 90-22.1 (Report of Foreign financial andFinancial Accounts, or FBAR)), to the effect that foreign accounts held in connection with retirement plan trusts are not considered 'financial accounts' for FBAR reporting purposes. We further request clarification that executives and managers who serve as trustees, fiduciaries, investment advisors or in other management or administrative capacities with respect to retirement plan trusts are exempt from FBAR reporting requirements with respect to those activities." (American Benefits Council)
Pumped-up Pensions Squeezing Atlanta
Excerpt: "In 2001 and 2005, the Atlanta City Council approved substantial increases in pension benefits for city workers -- but didn't figure out how to pay for them. Those decisions are not only hobbling city finances now, they threaten to cripple the city budget for years to come." (The Atlanta Journal-Constitution)
[Guidance Overview] New Accounting Rules Expand 10K Disclosure for Defined Benefit Plans
Excerpt: "For fiscal years ending after December 15, 2009, employers who sponsor defined benefit pension plans must provide significantly greater disclosure about plan assets in their companies' financial statements. This disclosure is required by a new FASB Staff Position -- FSP FAS 132(R)-1 -- and they drill deeply into plan investment details. This includes providing information about investment policies and strategies, and identifying significant concentrations of risk for expanded categories of plan assets." (The Vanguard Group, Inc.)
FASB Excludes Pensions from Its Definition of Financial Instruments
Excerpt: "The Financial Accounting Standards Board (FASB) decided at its August 19, 2009, meeting to exclude pension benefits and other postretirement benefit obligations from changes the FASB is considering to its definition of financial instruments. Specifically, the FASB has excluded 'employers' and plans' obligations for pension benefits; other postretirement benefits, including health care and life insurance benefits, postemployment benefits, and employee stock option and stock purchase plans; and other forms of deferred compensation arrangements as defined in the following . . . ." (Wolters Kluwer)
Pomeroy Bill Would Give Pension Plans More Time to Amortize Recent Losses -- at a Cost
Excerpt: "Funding relief legislation proposed by Rep. Earl Pomeroy, D-ND, would allow more time to amortize losses from the financial crisis if sponsors of single-employer pension plans provide minimum benefits or contributions under qualified plans or freeze executive benefits under nonqualified deferred compensation plans. Though prospects for enactment are uncertain, the bill is welcome news to single-employer and multiemployer plan sponsors seeking short-term and more long-lasting relief. [I addition to the text of Pomeroy's discussion draft for the pension funding relief bill, the target page links to a section-by-section summary of Pomeroy's discussion draft.]" (Mercer LLC)
[Guidance Overview] Labor Department Provides Unofficial Views on ERISA Compliance Questions
Excerpt: "Department of Labor staff gave their unofficial views on questions presented by the ABA's Joint Committee on Employee Benefits, including the making of distributions to missing or unresponsive participants, when a top-hat filing is required, and whether an accountant who provides services to the plan sponsor is considered 'independent' for plan audit purposes." (Deloitte)
[Guidance Overview] FASB's New Accounting Standards Codification: All Preexisting Non-SEC Accounting Standards Are Superseded (PDF)
Excerpt: "The purpose of this letter is to alert compensation professionals to a significant development in the reorganization of U.S. generally accepted accounting principles (GAAP). Beginning with interim and annual periods ending after September 15, 2009, all financial statements will make reference to the Financial Accounting Standards Board's (FASB) new Accounting Standards Codification (ASC or Codification) rather than previously existing accounting standards such as FASB Statement No. 123R. The reorganization does not create new accountingstandards or guidance, but the structure of the Codification is significantly different than that of previous accounting standards. This letter provides a brief overview of the Codification and identifies citations that are relevant to executive compensation." (Frederic W. Cook & Co., Inc.)
How Do Analysts Process Pension Information?
Excerpt: "This paper evaluates whether analysts can see through the financial statement, so as to value defined benefit (DB) pension funding status based on economic values of pension assets and obligations. The literature is divided on whether earnings forecasts and stock prices reflect economic pension information. Previous studies correlate pension variables with analysts' earnings forecasts or stock prices. The analysts' information processing has previously been a 'black box.' We opened this black box by interviewing and physically inspecting the analysts' spreadsheets to determine how they treated pensions in their valuation. By choosing the firms with highest probability of earning management in pensions (most abnormal pension assumptions), there will be a reward for the analysts to use correct pension information. However, we found that analysts do not incorporate relevant pension information into their valuation spreadsheets. Thus our study provides further evidence that skilled and influential market participants, the analysts, do not efficiently incorporate information into their forecasts and stock valuations." (Social Science Research Network)
An Overhaul or a Tweak for Public Pension Accounting
Excerpt: "After more than three years of deliberations, the board that sets the accounting rules for state and city governments is still far away from issuing a new standard for public pension funds. What may seem like tedious labors over technical matters can have a large impact on public employees, taxpayers and investors. Many municipalities around the country are grappling with serious shortfalls in their pension funds caused by the recession and other woes." (The New York Times; free registration required)
Certain Benefits and Compensation Arrangements Excluded from FASB Codification Project
Excerpt: "According to the summary of a recent board meeting, the U.S. Financial Accounting Standards Board (FASB) has decided to exclude certain pension and deferred compensation plans from the definition of financial instruments included in its Accounting Standards Codification project. The Board decided that the scope of the project would include all financial instruments as defined in the master glossary of the FASB Accounting Standards Codification, except employers' and plans' obligations for pension benefits; other postretirement benefits, including health care and life insurance benefits; postemployment benefits, employee stock option and stock purchase plans; and other forms of deferred compensation arrangements. FASB excluded these benefits due to their need for special attention." (International Foundation of Employee Benefit Plans)
Public Sector Offers Strong Response to GASB on Possible Accounting Rules Changes
Excerpt: "A wide range of public sector officials, including scores of fiduciaries, administrators, and participants of NCTR member systems, filed comments with the Governmental Accounting Standards Board (GASB) in response to its Invitation to Comment (ITC) on possible revisions to GASB Statements 25 and 27. GASB is considering whether changes to its standards for accounting and reporting on the pension benefits that governments provide to their employees are needed, and had asked for comments on a number of issues related to such possible revisions by July 31, 2009. In addition to pension plans and their board members, state officials and national organizations representing a large majority of users of public pension financial reports also weighed in, stating their strong opposition to the so-called 'Market Valuation of Liabilities' method, or MVL. GASB is also holding a public hearing later in August to discuss the ITC, at which public pension representatives will also testify, as will proponents of MVL." (National Council on Teacher Retirement)
Stock Option Backdating Likely More Widespread, According to Study
Excerpt: "The majority of companies that improperly backdated stock options never were caught by regulators or confessed to the practice, according to a new academic study. Researchers at the University of Houston's C.T. Bauer College of Business used a sophisticated statistical test to sift through more than 4,000 publicly traded companies for those with patterns of granting options at abnormally favorable times, often at low points for their share prices. The study identified 141 companies with such advantageous options-granting practices that the researchers concluded they were highly likely to have been involved in backdating. Ninety-two of those companies never were publicly linked to investigations or announced earnings restatements related to backdating." (The Wall Street Journal)
Judge Approves $925M UnitedHealth Backdating Options Suit Settlement
Excerpt: "UnitedHealth Group Inc. and its former chief executive William McGuire will pay $925 million to resolve an investor class-action lawsuit accusing the health insurer of improperly backdating stock options, Reuters reports. . . . Given that there was 'significant risk' to the plaintiffs recovering nothing had the case been fully tried, 'the $925.5 million settlement amount is substantial,' U.S. District Court Judge James Rosenbaum wrote in his 26-page order dated August 10, according to Reuters." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Valuing Retirement Plan Investments: The Roles of Plan Sponsors, Record Keepers, Investment Providers & Auditors (PDF)
11 pages. Excerpt: "If you are going through a retirement plan audit, the difficulties of valuing plan investments under Statement of Financial Accounting Standards 157 ('FAS 157' or the 'Standard') have probably become all too apparent to you. There are practical difficulties for just about everyone involved, including plan sponsors, record keepers, investment providers and auditors, even though volumes have been written about the technicalities of FAS 157. The vast majority of the problems stem from each of the parties having differing views of their roles and responsibilities and uncertainty regarding how the Standards apply to retirement plan investments. This white paper: 1. identifies the most significant practical problems; 2. reviews the Standard and guidance that relates to retirement plan investments; and 3. summarizes the general roles and responsibilities and what can reasonably be expected from retirement plan record keepers with respect to FAS 157 in the audit process." (The SPARK Institute)
[Guidance Overview] IRS Filing Extension for the Report of Foreign Bank and Financial Accounts (PDF)
2 pages. Excerpt: "On August 7, 2009, the Internal Revenue Service issued Notice 2009-62, extending the filing deadline for Form TD F 90-22. (commonly referred to as 'FBAR') for calendar year 2008 and prior years, from June 30, 2009 to June 30, 2010, for (i) persons with signature or other authority over, but no financial interest in, a foreign financial account, and (ii) persons with a financial interest in, or signature or other authority over, a foreign commingled fund (such as foreign investment entities) . . . . According to the notice, the IRS intends to issue formal guidance before June 2010 regarding the scope of the FBAR filing requirement for such persons." (Paul, Hastings, Janofsky & Walker LLP)
[Guidance Overview] Wisconsin Requirement that Professional Employer Organizations to Register with the State and Maintain $100,000 in Working Capital
Excerpt: "Effective July 1, 2009, professional employer organizations ('PEOs') must register with the State of Wisconsin and maintain $100,000 in working capital as demonstrated by audited financial statements prepared in accordance with generally accepted accounting principles ('GAAP'). PEOs are required to register within 180 days of July 1, 2009." (Michael Best & Friedrich LLP)
[Opinion] The Academy's Pension Practice Council's Response to GASB's Invitation to Comment on Pension Accounting and Financial Reporting (PDF)
42 pages. Excerpt: "The Academy response specifically addresses pension matters." (American Academy of Actuaries)
Treasury Form, Report of Foreign Bank and Financial Accounts (FBAR); Some Benefit/Pension Trusts May Need to File
Excerpt: "There has been confusion and uncertainty in the industry as to whether or not U.S. pension and employee benefit trusts with foreign holdings as investments must file FBAR. [Target page provides links to government and additional resources on the issue.]" (International Foundation of Employee Benefit Plans)
IASB Proposal to Change to Discount Rate for Valuing Pension and Other Retiree Benefits
Excerpt: "Planned amendments to IAS 19, Employee benefits, would require all companies to determine discount rates for valuing pension and other post-employment benefits from high-quality corporate bond yields. Currently, companies in countries without deep corporate bond markets must use government bond yields, resulting in reporting inconsistencies as spreads between corporate and government bond yields have widened in the financial crisis. The proposal is on the fast track to take effect for 2009 year-end. IASB intends to issue an exposure draft in August with a Sept. 30 comment deadline." (Mercer LLC)
[Guidance Overview] International Financial Reporting Standard 2 and Its Impact on U.S. Equity Compensation
Excerpt: "In the compensation arena, International Financial Reporting Standard 2 (IFRS2) impacts equity compensation plans. On August 27, 2008, the SEC approved a proposed 'roadmap' that could lead to the use of these international standards by US companies beginning in 2014, depending on the size of the company. While this date may be years away, compensation professionals nevertheless need to understand how current awards may be treated if IFRS2 becomes applicable." (Hay Group)
[Opinion] Response to GASB's Invitation to Comment on Revisions to Statements 25 and 27 (PDF)
Excerpt: "On behalf of the above-named organizations, we are responding to the Governmental Accounting Standards Board's Invitation to Comment on possible revisions to GASB Statements 25 and 27, providing standards for accounting and reporting on the pension benefits that governments provide to their employees. Together, we represent a wide range of users of public retirement system financial reports, including state legislators and other policymakers; executive officials, such as mayors, county officials, treasurers, and comptrollers; public employers, public employees and retirees; and trustees or other governing bodies of governmental pension plans." (National Council on Teacher Retirement)
[Guidance Overview] New FASB Accounting Standards' Ripple Effects on M&A
Excerpt: "The new Statement of Financial Accounting Standards 141R, 'Business Combinations,' and 160, 'Noncontrolling Interests in Consolidated Financial Statements,' might have fallen below the radar screen of many corporate dealmakers so far, but they have significantly changed the way costs for M&A deals must be managed and reported. While driven by the desire to increase transparency of accounting for deal costs, the new rules are also likely to have significant implications for HR's management of staff reduction and other integration issues." (Watson Wyatt Worldwide)
Former Counsel of Video Game Maker Gets Law License Suspended
Excerpt: "A New York state appellate court has suspended for three years the Empire State law license of the former general counsel of a New York video games maker in connection with backdating stock options. A New York Law Journal report said the penalty was handed down against Kenneth Selterman in connection with stock-option backdating activities at Take-Two Interactive Software where Selterman served as general counsel from 1999 to 2007. The company makes the popular 'Grand Theft Auto' game series." (PLANSPONSOR.com; free registration required)
Tough Times for Pension Funds
Excerpt: "Last year's stock market plunge ravaged pension finances precisely when other changes in pension accounting and design were taking effect. That means a broad swath of corporate America will be digging out of this pension mess for years. Whether you work for one of these firms or just invest in them in your 401(k) and other accounts, here are a few things you need to know . . . ." (Chicago Tribune)
IASB Proposes Move to Corporate Bond-Based Discount Rates in All Markets
Excerpt: "During meetings on July 21, 22 and 23, 2009, the International Accounting Standards Board (IASB) agreed to further develop a proposal that would give companies the option to use high-quality corporate bond-based discount rates to calculate pension accounting liabilities under IAS19 in all countries, including those where the corporate bond market is currently not considered to be deep. This development is of particular interest to companies that sponsor pension plans in Asia, Africa, Latin and South America, as well as some European countries (such as Switzerland, Sweden and Norway)." (Watson Wyatt Worldwide)
NCPERS Reply to GASB Invitation to Comment on Pension Accounting and Financial Reporting
Excerpt: "NCPERS kept the focus of its comments on the issues related to Market Value of Liabilities, although the scope of GASB's ITC included other issues related to pension accounting and financial reporting." (National Conference on Public Employee Retirement Systems)
[Opinion] Public-Sector Pensions: Accounting, Funding, Promises
Excerpt: "In the private sector, companies are required to discount their liabilities by the yield on AA corporate bonds; the rate reflects the cost of their borrowing and allows for the possibility that the company defaults on its promise. Although companies may default, it seems odd for a government to make pension promises and then use accounting methods that assume it may fail to keep them. In America, for example, state and local pension benefits are guaranteed by law in many states. That suggests the discount rate should be the Treasury bond yield, considered the risk-free rate." (The Economist Newspaper Limited)
San Diego, California, Pension Funding Tinkering Defended
Excerpt: "San Diego pension officials yesterday defended their decision to study accounting changes that could shave $50 million off of the city's estimated $225 million payment into the retirement fund next year. Several critics, including City Councilman Carl DeMaio, lashed out at the board for broaching the subject of loosening formulas for funding future pension obligations. . . . The accounting changes would provide short-term savings, but could result in higher payments in later years." (The San Diego Union-Tribune)
[Guidance Overview] GASB's Invitation to Comment on Pension Accounting and Financial Reporting for Governmental Plans; Plain Language Supplement Added to Invitation
Excerpt: "Written comments may be submitted through an Internet-based form or addressed to the Director of Research and Technical Activities, Project No. 34, and emailed to director@gasb.org or mailed to the GASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. A public hearing on the ITC is scheduled during the Board's regular meeting on August 26, 2009, beginning at 8:30 a.m., at the GASB offices in Norwalk, CT. Interested individuals or organizations may participate in the public hearing in person or by telephone. The deadline for written notice of intent to participate in public hearing: July 31, 2009." (International Foundation of Employee Benefit Plans)
All You Need to Know About ERISA Audits
Excerpt: "It's ERISA audit time again. Now that the regular tax season is over, accountants soon will be turning their attention to ERISA plan audits. If your retirement plan is subject to the audit requirements, here are the basics you should know - including how not to hire an auditor." (Employee Benefit News; free registration required)
[Guidance Overview] Plan Investments: Hard to Value Assets
Excerpt: "The topic of hard to value pension plan assets continues to garner attention. While the accounting and regulatory communities make efforts to push plan sponsors to 'better' value assets, many sponsors are confused about the exact nature of their requirements to report those assets. First we fundamentally discuss issues that hard to value assets raise, followed by a look at recent regulatory activity." (JPMorgan Chase & Co.)
Public Pensions: Cooking the Books? Hiding the Truth from Taxpayers?
Excerpt: "Here's a dilemma: You manage a public employee pension plan and your actuary tells you it is significantly underfunded. You don't want to raise contributions. Cutting benefits is out of the question. To be honest, you'd really rather not even admit there's a problem, lest taxpayers get upset. What to do? For the administrators of two Montana pension plans, the answer is obvious: Get a new actuary. Or at least that's the essence of the managers' recent solicitations for actuarial services, which warn that actuaries who favor reporting the full market value of pension liabilities probably shouldn't bother applying." (The Wall Street Journal)
GASB Issues Guidance on Multi-Employer OPEB Plans
Excerpt: "The Governmental Accounting Standards Board (GASB) has issued an exposure draft of a proposed statement that addresses issues related to the use of the alternative measurement method and the frequency and timing of measurements by employers that participate in agent multiple-employer other postemployment benefit (OPEB) plans. The proposed Statement would amend paragraphs 33 - 35 of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, to permit an agent employer that has an individual-employer OPEB plan with fewer than 100 total plan members to use the alternative measurement method, at its option, regardless of the number of total plan members in the agent multiple-employer OPEB plan in which it participates." (PLANSPONSOR.com; free registration required)
FASB Announces New Codification Structure, Superseding All Existing Statements
Excerpt: "The Financial Accounting Standards Board (FASB) has announced that its single source of authoritative nongovernmental U.S. Generally Accepted Accounting Principles (GAAP), the FASB Accounting Standards Codification?, will be effective for interim and annual periods ending after September 15, 2009. The FASB expects that the new system will reduce the amount of time and effort required to research an accounting issue and will provide accurate information with real-time updates as new standards are released." (Wolters Kluwer)
A Note on the Financial Accounting Standards Board Accounting Standards Codification?
Excerpt: "Avi Lev, [a very smart tax lawyer,] recently pointed out that, effective July 1, there is a new codification of accounting opinions. This sounds dry, but for those who work in this area, it is a phenomenal endeavor. These are the rules that regulate the reporting of most financial activity, and they have previously been scattered and disunited in their presentation. [See the Codification Website at http://asc.fasb.org/home.]" (theworkplace.biz)
Accounting for Pensions: Under Construction
Excerpt: "The purpose of this article is to bring together in one place ? and try to make sense of ? the various ongoing Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) projects on pension accounting. IASB deliberations are relevant to US companies because FASB and IASB are coordinating a broad review/revision of pension accounting with a view to 'convergence' ?unifying, where possible, FASB and IASB accounting." (JPMorgan Chase & Co.)
Executive Compensation: What's Reasonable?
Excerpt: "One factor in determining reasonable compensation that has gained prominence in some circuits, particularly the Seventh, is the value of the employee's contributions as reflected in the return on equity (ROE) of a hypothetical independent investor in the corporation, and the effect of that compensation on ROE. These are calculations CPAs are well-equipped to assist companies in making." (American Institute of Certified Public Accountants)
IASB Proposes Clarification of Accounting for Prepaid Pension Contributions
Excerpt: "The IASB has proposed changes to IFRIC 14, IAS 19--The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, to clarify how much of an asset may be recognized for prepaid minimum required contributions to pension plans. As proposed, an employer reporting under IAS that sponsors a US qualified pension plan with ongoing accruals could apparently recognize an asset equal to the greater of the plan's surplus or its credit balance. Whether this was the intended result is unclear, so further revisions of the proposal are possible. The comment deadline is July 27, 2009." (Mercer LLC)
FASB Going to Codification System on July 1, 2009
Excerpt: "The U.S. Financial Accounting Standards Board (FASB) is expected to institute a major change in the way accounting standards are organized on July 1, 2009. The FASB Accounting Standards Codification (TM) is expected to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (GAAP). After final approval by the FASB only one level of authoritative GAAP will exist, other than guidance issued by the Securities and Exchange Commission (SEC). All other literature will be non-authoritative. . . . While the FASB Codification is designed to make it much easier to research accounting issues, the transition to use of the Codification will require some effort and training. The FASB offers a free online tutorial, weekly alerts and an archived Webcast. In addition, Codification training opportunities are offered through professional accounting organizations such as the American Institute of Certified Public Accountants (AICPA)." (International Foundation of Employee Benefit Plans)
Resources for GASB Invitation to Comment on Pension Accounting and Financial Reporting
Excerpt: "The Governmental Accounting Standards Board currently is reviewing Statements 25 and 27, standards that provide guidance on pension accounting and financial reporting. In April 2009, GASB distributed an Invitation to Comment to solicit perspectives of interested individuals and groups regarding possible changes to these standards. Responses to the ITC are due July 31, 2009. Listed [on the target page] are resources pertaining to the ITC. Portions of the Invitation to Comment reflect views held by those who believe that public pension financial reporting should include plans' so-called market value of liabilities." (Governmental Accounting Standards Board)
[Guidance Overview] The GASB's Invitation to Comment on Pension Accounting and Reporting Standards (PDF)
Excerpt: "On March 31, 2009, the Governmental Accounting Standards Board (GASB) issued its Invitation to Comment (ITC) on potential changes in accounting and financial reporting standards related to public pensions. The ITC is an early step in the GASB's project to review these standards, and is intended to encourage comments from interested parties before the GASB begins its formal deliberations. Written comments are due to the GASB by July 31, 2009, and a public hearing is scheduled during the Board's regular meeting on August 26, 2009. This article summarizes the ITC, along with various arguments suggested in the ITC for and against potential changes to the standards. However, the article does not provide a detailed evaluation of the arguments, which will be done in a separate paper." (Gabriel, Roeder, Smith & Company)
[Guidance Overview] Compliance Considerations and Issues Surrounding the Repricing of Stock Options.
Excerpt: "The accounting for stock options (including re-pricings) is governed in the United States by FAS 123(R). Under this standard, the charge for any new options is only for the incremental value. Thus, in a value-for-value exchange (or one that is less favorable to the grantees), the re-pricing may be a shareholder-neutral event from an accounting expense standpoint." (JPMorgan Chase & Co.)
[Opinion] Taking No Action, Public Employee Plan Policymakers and Senior Administrators Are Digging Deeper Hole in OPEB Deficits
Excerpt: "[P]ension costs are surging as investment losses compel pension funds to send higher bills to public employers. That leaves virtually no money available for most jurisdictions to fully fund their OPEB plans on an actuarial basis. So what are most governments doing? Unfortunately, for many the answer is 'nothing.' Paralysis has set in, as the absence of sufficient funding leaves many budget offices declining to set up a properly funded OPEB trust. Many public officials have simply put their heads in the sand and decided to wait out the recession before looking seriously at their OPEB problems." (Governing.com)
Certain Implementation Issues Related to Other Postemployment Benefits
Excerpt: "Primary Objective: The objective of this project is to consider whether to modify certain requirements related to the measurement of actuarial liabilities for other postemployment benefits (OPEB) by agent employers." (Governmental Accounting Standards Board)
2008 Disclosures of Funding, Discount Rates, Asset Allocations and Contributions
Excerpt: "During the latter months of 2008, Watson Wyatt projected year-end pension funding status for accounting purposes at various times, capturing different interest rate and market environments. Now Watson Wyatt has analyzed actual funded status for the 100 largest pension sponsors among publicly traded companies with year-end 2008 fiscal dates, as disclosed in their Securities and Exchange Commission (SEC) 10-K filings. During 2008, actual funding ratios in this group declined by an average of 28 percentage points." (Watson Wyatt Worldwide)
GASB Seeks Comments on Pension Accounting and Reporting for Pension Plans (PDF)
Excerpt: "The Governmental Accounting Standards Board (GASB) has issued an Invitation to Comment (ITC) on Pension Accounting and Financial Reporting. The topics considered in the ITC include the process on which pension accounting and financial reporting should focus; recognition of liabilities and expenses; measurement of unfunded pension obligations; the use of actuarial methods; and reporting by government employers in costsharing multiple-employer pension plans and reporting by pension plansthemselves." (National Conference on Public Employee Retirement Systems)
[Opinion] BusinessEurope, Nippon Keidandren, FEI Comment to IASB on Employee Benefits
Excerpt: "On April 20, 2009 a joint comment letter was filed by BUSINESSEUROPE, Nippon Keidanren and the Committees on Corporate Reporting (CCR) and Benefits Finance (CBF) of Financial Executives International in response to the International Accounting Standards Board's current deliberations on the IASB's Discussion Paper entitled: Preliminary Views on Amendments to IAS 19, Employee Benefits." (Financial Executives International)
[Guidance Overview] Change in Accounting Method Issues Arising from VEBA Terminations and IBNR Deductions
Excerpt: "This article addresses the accounting method issues that arise in two scenarios. In the first scenario, an employer terminates a welfare benefit fund, such as voluntary employees' beneficiary association (VEBA). In the second scenario, an employer without a VEBA begins taking deductions under IRC ? 162(a)(1) for medical claims that are incurred but not reported (IBNR) as of the end of the employer's tax year." (Deloitte via BenefitsLink.com)
[Guidance Overview] This Year's Benefit Plan Audit Headache: FAS 157
Excerpt: "The FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements ('FAS 157') establishes a framework for measuring fair value and expands disclosures about fair value measurements in the notes to a plan's financial statements. As a practical matter, FAS 157 must be implemented for all plans that prepare financial statements, without regard to whether the auditor is engaged to perform a full scope or limited scope audit. FAS 157 applies for fiscal years beginning after November 15, 2007." (form5500help.com)
Notice of Public Hearing and Request for Written Comments: Pension Accounting and Financial Reporting (PDF)
76 pages. Excerpt: "A public hearing is scheduled during the Board's regular meeting on August 26, 2009, beginning at 8:30 a.m. in Norwalk, CT. Although interested participants may attend in person, individuals or organizations also may participate in the public hearing by telephone. Details regarding their participation will be provided after the GASB receives a notice of intent to speak. Deadline for written notice of intent to participate in public hearing: July 31, 2009." (Governmental Accounting Standards Board)
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