The US Financial Accounting Standards Board (FASB) has proposed an accounting standard update that is intended to provide greater transparency regarding entities that participate in multiemployer pension and other postretirement benefit plans.
The updated standard would help users of financial statements better assess the potential risks faced by employers participating in multiemployer plans.
US GAAP currently requires employers to disclose their total contribution to multiemployer plans, however there is no requirement to describe the funding status of these plans.
Under the proposed guidance, employers would have to provide more information, including:
- A description of the plans the employer is involved with;
- The employer’s contractual commitments to the plans; and,
- The expected impact of participating in the plans on the employer’s future cash flows (including the potential impact of plan withdrawal obligations).
The draft proposal is available for comment until 1 November.