The decision not to include withdrawal liability in the new standard is a victory for construction contractors and other businesses that contribute to MEPPs. TAUC believed the withdrawal liability proposal was seriously flawed because it would have required disclosure of information that was two years out of date, not auditable and ultimately misleading to any end-user of financial statements. TAUC joined with other trade associations to form the Construction Industry FASB Coalition (CIFC) to engage in positive and constructive collaboration with FASB regarding changes to the reporting requirements, and our efforts finally paid off.
FASB also declined to require that employers provide a “point-in-time” estimate of obligations with respect to the underfunded status of individual plans.
“Many of those who commented on the FASB’s proposal on multiemployer plans told the Board that the withdrawal liability would not be an appropriate proxy for an employer’s proportional share of the underfunded status of the plan,” FASB said in a statement. “They suggested that the employer’s share of the underfunded status of the plan can only be determined through the collective bargaining process and they urged the FASB not to require a ‘point-in-time’ estimate of an employer’s obligations with respect to underfunding.”
Although withdrawal liability was nixed, many other changes were approved. The revised accounting standard will include the following disclosures:
FASB said it expects that the revisions will be finalized in September. For public entities, the enhanced disclosures will be required in fiscal years ending after December 15, 2011. For nonpublic entities, the enhanced disclosures will be required in fiscal years ending after December 15, 2012.