FASB Says Attack After "Math" Not Extraordinary Item

October 1, 2001(PLANSPONSOR.com) - The Financial Accounting Standards Board (FASB) has decided against the use of an 'extraordinary item' treatment for losses incurred in connection with the recent terrorist attacks.

In accounting terms, an extraordinary item is defined as non-recurring event that materially affected a company’s finances in a reporting period. An explanation of the item must be provided in a company?s annual or quarterly report.

Entries classified as extraordinary are shown on the income statement net of tax effects and after a subtotal income before extraordinary items.

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At a meeting on September 20, the FASB had tentatively concluded that some losses, precipitated by the events of September 11, should be shown as extraordinary and began efforts to clarify what losses should fall into this category.

Turnaround

However at a later meeting it was decided that extraordinary item treatment should not be used.

The FASB?s Emerging Issues Task Force took the view that the far-reaching effects of the attacks, coupled with an already weakening economy, would make capturing the resulting economic effects in companies’ financial statements problematic (see FASB Task Force Focuses on Attack Impact ).

Further, the economic effects of the events were so extensive and pervasive that it would be impossible to capture them in any one financial statement line item and that showing any part of the effect as an extraordinary item would hinder, rather than help effective communication.

FASB

The Financial Accounting Standards Board establishes standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants.

– Camilla Klein             editors@plansponsor.com

Aging Boomers Require New Strategies

January 9, 2001 (PLANSPONSOR.com) - With a growing number of boomers nearing retirement, employers are reevaluating strategies for managing the impact, according to a new study.

The survey, by HR consultant William M. Mercer, found that 83% of employers in higher education currently have at least one-fourth of their workers over age 50.

Government followed with 50%, manufacturing with 38%, not-for-profit service organizations 29%, and for-profit service organizations 12%.

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Goal-Oriented

While more than half (55%) of the survey respondents have no specific goals, multiple goals were cited by the remainder, including:

  • 30% who target retention efforts to workers with special expertise or who have a key relationship
  • 16% encourage all older workers to stay on
  • 10% enable early retirement
  • 7% target early retirees from other companies to fill open positions.

Of the 59% that reported having a policy on rehiring retirees:

  • 63% will rehire retirees as part-time or temporary workers (benefits-eligible if sufficient hours are worked)
  • 61% will rehire retirees as independent contractors or consultants (not benefits-eligible)
  • 24% will rehire retirees full-time after a waiting period
  • 15% maintain a pool of retirees for temporary work
  • 4% prohibit rehire of retirees.

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