FASB assumptions

[Guest Sus95]

Who sets the discount rate, expected rate of return on assets, etc. when preparing the FASB report? Is it the actuary, auditor, or both?

[JAY21]

It's supposed to be the employer.

[Guest Sus95]

It's supposed to be the employer.

Do you have any reference I can go to for this? I can't find it in the FASB statements, and the employer and accountant for this plan I am working on seem to think the actuary should set the assumptions.

[Blinky the 3-eyed Fish]

Of course the actuary and auditor should have input since the auditor will be the one creating the financials and the actuary will be the one making the yield curve calculations.

[Andy the Actuary]

In SFAS, "A" stands for accounting. Yup, it's theirs, not ours. The employer with auditor's blessing should establish the assumptions. The actuary comments if it believed the assumptions are inappropriate. Of course, since Sarbanes-Oxley, it's not atypical for the accounting firms to disavow that they've ever heard of FASB and in all liklihood will hold, "you tell us what you want to do and we'll tell you if it's acceptable." This is not a bad attitude but the reality of observations.

As far as words, do you find the words "an actuary must certify blah blah blah?" If you search FASB87 for "actuary," you will return no hits, other than statement 230:

230. Information about the plan's actuary was suggested as another possible disclosure.

Recommendations were to provide the name and professional qualifications of the actuary and

comments of the actuary about any anticipated changes in plan costs or contribution rates. The

Board concluded that such information is outside the scope of financial reporting.

http://www.fasb.org/pdf/fas87.pdf

[david rigby]

Responses are correct.

It may help the questioner to note, no matter who has "input" into determing the rates, if anything is challenged by the SEC, it must be the plan sponsor (ie, the owner of the financial statements) who answers those questions.