On July 31, 2015 Accounting Standards Update (ASU) 2015-12, which simplified presentation and disclosure requirements for employee benefit plans, was issued. Below is a summary of the changes to financial statement presentation and disclosures as a result of the ASU.
Part I: Fully Benefit-Responsive Investment Contracts
The amendments in Part I require that fully benefit-responsive investment contracts be measured, presented and disclosed only at contract value. A plan will continue to provide disclosures that help users understand the nature and risks of fully benefit-responsive investment contracts.
Part II: Plan Investment Disclosures
The amendments in Part II require that all investments (that is, both participant-directed and nonparticipant-directed investments) should be disaggregated based only on general type, eliminating the need to further disaggregate the investment into specific type.
In addition, the amendments in Part II eliminate the requirements to disclose:
- Individual investments that represent 5% or more of net assets available for benefits.
- The net appreciation or depreciation for investments by general type. The net appreciation or depreciation in investments for the period still is required to be presented in the aggregate, but no longer will be required to be disaggregated and disclosed by general type.
Part III: Measurement Date Practical Expedient
The amendments in Part III apply only to plans that have a fiscal year-end that does not coincide with a month-end. Part III permits plans to measure investments and investment-related accounts as of a month-end date that is closest to the plan’s fiscal year-end. If Part III is applied and a contribution, distribution, and/or significant event occurs between the alternative measurement date and plan’s fiscal year-end, the plan should disclose the amount of the contribution, distribution, and/or significant event.
Effective Date
The amendments above are effective for fiscal years beginning after December 15, 2015, with earlier application permitted. Amendments in Part I and II should be applied retrospectively for all financial statements presented. The amendments in Part III should be applied prospectively.