FASB Issues Proposed Accounting Standards Update for Multiemployer Plans

The proposed Update sets forth disclosures that the Board believes would help users of financial statements better assess the potential risks faced by employers participating in multiemployer plans.  

A news release explained that current U.S. Generally Accepted Accounting Principles (GAAP) requires employers to disclose their total contribution to multiemployer plans, but 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 in which the employer is involved, 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). 

If approved, the proposed Update would require a public company to provide the enhanced disclosures for fiscal years ending after December 15, 2010, and in subsequent fiscal years. A nonpublic company would be required to provide the enhanced disclosures for fiscal years beginning on or after December 15, 2010, and in subsequent fiscal years (one year later than a public company).