FASB Issues Proposed Accounting Standards Update to Improve Disclosure about Entities Participating in Multiemployer Plans

Norwalk, CT, September 1, 2010—The Financial Accounting Standards Board (FASB) has issued an Exposure Draft of a proposed Accounting Standards Update (Update) intended to increase transparency in financial reporting about entities that participate in multiemployer pension and other postretirement benefit plans.

The proposed Update sets forth proposed disclosures that the Board believes would help users of financial statements better assess the potential risks faced by employers participating in multiemployer plans. A recent study of over 100 multiemployer plans, including the largest plans in the country (as measured by assets), indicated that in 2008 those plans were collectively underfunded by over $160 billion (approximately 44% of their collective plan liabilities). Current U.S. 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).

“Investors and other financial statement users have expressed concern that current financial statements do not provide enough information about the commitments and potential risk related to multiemployer pension arrangements,” states FASB member Leslie Seidman. “We encourage our constituents to review and provide comment on the Board’s suggestions for expanding disclosure in this area, one that has gained greater urgency as a result of the recent financial crisis and underfunding of many such plans.”

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).

The comment period for the proposed Update extends through November 1, 2010. The Exposure Draft is available at

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing 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. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at