FASB Issues Update Regarding Employer's Participation in Multiemployer Plan

After months of deliberation and an outpouring of feedback from the multiemployer industry, the Financial Account Standards Board (FASB) finalized its new disclosure requirements in September regarding an employer's participation in a multiemployer plan. The amendments in this Update, Accounting Standards Update (ASU) No. 2011-09 Disclosures about an Employer's Participation in a Multiemployer Plan, require that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. For employers that participate in multiemployer pension plans, the amendments in this Update require an employer to provide additional quantitative and qualitative disclosures. The amended disclosures provide users with more detailed information about an employer's involvement in multiemployer pension plans, including:

• The significant multiemployer plans in which an employer participates, including the plan names and identifying numbers
• The level of an employer's participation in the significant multiemployer plans, including the employer's contributions made to the plans and an indication of whether the employer's contributions represent more than 5% of the total contributions made to the plan by all contributing employers
• The financial health of the significant multiemployer plans, including an indication of the funded status, whether funding improvement plans are pending or implemented, and whether the plan has imposed surcharges on the contributions to the plan
• The nature of the employer commitments to the plan, including when the collective-bargaining agreements that require contributions to the significant plans are set to expire and whether those agreements require minimum contributions to be made to the plans

Using the employer identification number, the plan name, and, if applicable, the plan number, users of financial statements would be able to obtain additional information, including the funded status of the plan(s), from sources outside the financial statements, such as the plan's annual report (Form 5500).

For public entities, the amendments in this Update are effective for annual periods for fiscal years ending after December 15, 2011. For nonpublic entities, the amendments are effective for annual periods for fiscal years ending after December 15, 2012. The amendments should be applied retrospectively for all prior periods presented. Let us know if you have any questions.

By Eileen E. Brassil, CPA, Partner, ebrassil@legacycpas.com