AICPA Employee Benefit Plans (EBP) Conference
The recent AICPA EBP Conference (held May 2016) covered a wide variety of topics related to employee benefit plans, including updates from the federal regulators, key upcoming accounting and auditing changes impacting EBPs, etc. Below are some of the topics discussed:
- Accounting Standards Update (ASU) 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investment in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) – removes the requirement to categorize investments for which fair values are measured using NAV as a practical expedient in the fair value hierarchy. However, it is required to disclose the amount measured using NAV as a practical expedient so that financial statement users can reconcile the fair value of investments included in the fair value hierarchy to total investments measured at fair value on the statement of net assets available for benefits.
- ASU 2015-10, Technical Corrections and Improvements – a change to the definition of “readily determinable fair value” (RDFV) has the potential to change previously reported fair value hierarchy levels for many investments that previously used the NAV as a practical expedient in both retirement accounts in plan sponsor financials as well as investments reported in EBP financial statements. Based on the revised definition of RDFV, investments such as pooled separate accounts (PSAs) and common/collective trusts (CCTs) may no longer qualify to use NAV as the practical expedient.
- ASU 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (ASU) – reduces the complexity in EBP plan accounting; refer to our Winter 2016 edition for more details on the plan financial reporting simplification.
- Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 18, Related Parties – establishes requirements regarding the auditor’s evaluation of a company’s identification of, accounting for, and disclosure of relationships and transactions between the plan and its related parties for plans that are subject to filing Form 11-K with the Securities and Exchange Commission (SEC).
- Cybersecurity – cyber risks to EBPs is a current focus for the Department of Labor (DOL), who discussed its concerns as to how both plan sponsors and service providers are addressing plans’ cyber risks. See also the article in this edition.
- DOL’s Employee Benefits Security Administration (EBSA) – it was announced at the conference that the first and long-time Chief Accountant of the EBSA, Ian Dingwall, will be retiring effective January 2017.