Magazine article The CPA Journal

Disclosures about Pensions and Other Postretirement Benefits

Magazine article The CPA Journal

Disclosures about Pensions and Other Postretirement Benefits

Article excerpt

It all started with the Jenkins Committee report, Improving Business Reporting-A Customer Focus, in December 1994. One of its recommendations was that "Standard setters should search for and eliminate less relevant disclosures." FASB responded by issuing a prospectus, Disclosure Effectiveness, in July 1995. At the time, the stated objective of the exercise was to obtain comments and encourage research on disclosure related issues, such as cost effectiveness, information overload, and the role of the accounting profession in providing useful information to investors and other financial statement users. Respondents generally supported a project to improve disclosure effectiveness and some suggested that

pensions, other postretirement benefits, income taxes, and leases were good candidates for special attention. In January 1996, the board's advisory council got into the act with several members suggesting that the board adopt an inductive approach to the project by evaluating the requirements for disclosure about pensions and other postretirement benefits. An ad-hoc committee agreed to look at pensions as an example, and at the some time the board approved a multitrack approach that included looking at materiality considerations in evaluating disclosures. In October 1996, the board decided to proceed with the inductive approach to determine whether disclosures in this specific area could be improved and, if so, whether any of the approaches undertaken could be applied to other accounting topics.

The result of all this was the issuance in June 1997 of an exposure draft of a proposed statement on Employers' Disclosures About Pensions and Other Postretirement Benefits and amendment of FASB Statements No. 87, 88, and 106. Comments were due by September 30, 1997. The statement would be effective for fiscal years beginning after December 15, 1997, with earlier application encouraged. The statement is on a fast track.

The draft statement covers disclosures only and standardizes those for SFAS Nos. 87 and 106 to the extent possible. It suggests a parallel format for presenting information about pensions and other postretirement benefits and elim inates, adds and changes

various disclosures, includ

ing optional reduced disclosures for nonpublic entities that qualify.

Surprisingly, for this writer anyway, the first thing eliminated was the requirement to provide a description of the plan. …

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