Initial Audit

[Guest EWESTENBERGER]

We are auditing the December 31, 2008 financial statements for a defined benefit plan. The plan was formed Aug 11, 2008. The actuary did not do a valuation since the first valuation for the plan will be based on beginning year balances ( 1/1/09 for the period of 8/11/08 – 12/31/08). The report received from the actuary states "Actuarial Valuation for Funding Purposes as of 8/11/08. Does anyone know how to footnote the Accumulated Plan Benefits? Usually, this footnote would state the vested benefits, non-vested benefits and then the changes between valuation periods. Would you just disclose that no valuation was performed?

[mwyatt]

I'd check back with the actuary. There indeed was (or should have been) an actuarial valuation prepared for the 2008 plan year.

[SoCalActuary]

We are auditing the December 31, 2008 financial statements for a defined benefit plan. The plan was formed Aug 11, 2008. The actuary did not do a valuation since the first valuation for the plan will be based on beginning year balances ( 1/1/09 for the period of 8/11/08 – 12/31/08). The report received from the actuary states "Actuarial Valuation for Funding Purposes as of 8/11/08. Does anyone know how to footnote the Accumulated Plan Benefits? Usually, this footnote would state the vested benefits, non-vested benefits and then the changes between valuation periods. Would you just disclose that no valuation was performed?

It would appear that the actuary has not yet delivered a valuation under FAS 158. You can expect that a valuation was completed for IRS purposes. You need to ask for the FAS 158 statement.

FYI, the values on 8/11/08 would likely show a zero liability, unless the plan took over some prior benefit structure or the plan provided some credit for prior services. You would still need an expense determination for your fiscal year, along with a statement of funded status. But these services are normally provided upon request, since FAS 158 is not a required report for ERISA purposes.