Employee Benefit Plan Reporting: It’s Simple

employee benefit plan reportingF-A-S-B, it’s easy as 1-2-3. As simple as A-S-U 2015-12. The Financial Accounting Standards Board is singing a new tune these days as it continues down the path of its Simplification Initiative. The Accounting Standards Update (ASU) for Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Part (I) Fully Benefit-Responsive Investment Contracts, Part (II) Plan Investment Disclosures, Part (III) Measurement Date Practical Expedient is one such measure that aims to reduce the complexity in employee benefit plan accounting. The amendments (Parts I, II, and III) that went into effect for fiscal years beginning after December 15, 2015, significantly impact benefit plan reporting by eliminating some of the financial statement reporting and disclosures that were previously required. The “sum of these parts”—we’ll explore each below—equals a shift toward simplification.

Part I of this ASU modifies the guidance for fully benefit-responsive investment contract (FBRIC) by eliminating the reporting requirement that employee benefit plans measure the investment contract at fair value. An adjustment from fair value to contract value is no longer required on the face of the financial statement. Only the contract value measurement of the FBRIC is mandatory for reporting purposes. This is the most relevant measure for the contracts, because it is the amount participants typically receive if they initiate allowed transactions under the terms of the plan. However, plans still must disclose a description for the nature of each investment and any events that could hinder the ability of the plan to transact at contract value. By implementing this update, plans are reporting on relevant information while reducing complexity for the FBRIC.

Part II of this ASU addresses the requirement that plans must report individual investments that represent 5% or greater of net assets available for benefits and net appreciation or depreciation of investments by general type as well as by nature, characteristics, and risks. This new ASU simplifies the reporting process by allowing plans to disaggregate their investments measured using fair value by general type only, either on the face of the financials or on the notes, and is no longer necessary to be broken down any further.

Part III of this ASU amends the guidance for plans whose fiscal year does not correspond with a month-end. Plans will be allowed to use the month end that is closest to the plan’s fiscal year end for reporting purposes. Parts I and II require retrospective application, and Part III should be applied prospectively, each in its entirety.

If you have questions about this ASU, or would like to request a speaker on this topic for your organization or event, contact one of our executives below, (800) 270-9629.

Mike Shamblin

Mike Shamblin

Managing Principal of Audit & Assurance Services

Matt Neilson

Matt Neilson

Director of Financial Reporting

Related Posts
PYA is pleased to announce the promotions of Michael Ramey, Matt Stuart, and Jeff Pate to the level of Equity Principal. PYA has announced the promotion of Senior Manager Michael...
Read More

PYA Announces Three New Equity Principals

In today’s business environment, cloud computing arrangements play a key role in the day-to-day operations of companies large and small. The Financial Accounting Standards Board’s (FASB) Accounting Standards Update (ASU)...
Read More

Clearing Up Cloud Computing Accounting

An on-demand webinar, presented by Mike Shamblin, CPA, and brought to you by PYA, helps lay the foundation for the new revenue recognition standard.  The webinar guides healthcare providers of...
Read More

PYA On-Demand Webinar Outlines the New Revenue Recognition Standard in Preparation for Implementation

Qualified conservation easements are becoming an increasingly popular way to save on your tax bill, but what exactly is a conservation easement, and what do you need to know to...
Read More

Conservation Easements: Save the Land, Save Your Money

In the wake of this year’s devastating hurricane season, the President signed into law the “Disaster Tax Relief and Airport and Airway Extension Act of 2017” (the Act). This law...
Read More

Individual Tax Relief for Disaster Areas

Blockchain technology, one of the biggest technology developments in years, has the potential to transform the accounting and audit (A&A) industry. The potential benefits are numerous, but so are the...
Read More

Blockchain Technology—An Audit and Accounting Awakening

Guidance on accounting for share-based payment awards is clear...unless it isn't. The Financial Accounting Standards Board (FASB) offered advisement on this very topic in its Accounting Standards Codification (ASC), Compensation—Stock...
Read More

Share-Based Payment Awards: An Update on Modification Accounting

The growing popularity of companies like Airbnb and Vacation Rentals By Owner (VRBO), has many Americans considering renting out their homes, or even specific rooms in their homes,  in hopes...
Read More

Tax Rules to Know When Renting Your Home

Securing fidelity bond coverage as part of your retirement plan is a step in the right direction toward safeguarding your business from mishandled funds, mismanagement, and abuse. Further, it is...
Read More

The Importance of Fidelity Bond Coverage in Your Retirement Plan

Share This Insight

If you received value from this article, please share it with your network (e.g., Facebook, Twitter, LinkedIn). Icons below for your convenience.

Stay Current

* indicates required
Monthly eNewsletters
See more newsletter and alert options.

PYA Population Health Ascend

PYA Healthcare Blog

PYA Thought Leadership Services

The Healthcare Loop