FAS87 footnote disclosure

[david rigby]

I am reviewing draft footnote from non-profit sponsor (don't know who prepared the draft, probably auditor), with the following item immediately following the funded status:

Benefit cost included in the combined statements of operations and changes in net assets

Never seen this before. Can anyone help my poor brain understand what this means?

[david rigby]

Anyone?

[SoCalActuary]

First choice - ask the author, presumably the auditor.

Second choice - make a guess. Here's mine:

Benefit costs were not separately identified in the financial statement, because the benefit expenses were combined into other accounting entries (maybe payroll?)

This sounds like a whitewash, to be corrected only if the auditor gets critical remarks during their peer review or by the users of the audit report.

[JanetM]

Are they saying the income/expense for the year is recognized in statements?

[JanetM]

Are you looking at sponsors financial statement footnotes on FAS87 or the Plan financial statement foot notes?

[Guest DBtech]

Pax, back when I was in school in the last millenium, we used to call the statement of operations the P&L or Income Statement, and the changes in assets statement the Balance Sheet. I think that's what this Newspeak is referring to.

[wmyer]

DBTech, bear in mind that this is a non-profit, as Pax carefully indicated. There are different reporting considerations for non-profits (FASB 116 and FASB 117). What is called a "balance sheet" in a for-profit corporation is generally called a "statement of financial position" in a non-profit. What is called an "income statement" in a for-profit corporation is generally called a "statement of activities" in a non-profit (or alternatively a "statement of revenue, expenses and changes in net assets" or a "statement of changes in net assets").

[MGB]

It may be a reference to the fact that the "benefit cost" is inclusive of changes in the additional minimum liability.

Nonprofits do not have a "other comprehensive income" account, which is available to other entities under GAAP.

Any change in the additional minimum liability runs through the statement of operations (i.e., the income statement) in the same manner as the net periodic benefit cost. It is not a direct change to equity (which they do not have), bypassing the income statement like what happens for other entities under GAAP.