KPMG Comments on FASB Proposals about Defined Benefit Plan Disclosures; Presentation of Net Benefit Cost
May 02, 2016
From the Financial Reporting View
KPMG LLP recently commented on two proposed FASB ASUs that address reporting of pensions and other postretirement benefits to employees:
Changes to the Disclosure Requirements for Defined Benefit Plans is one of four disclosure reviews that the FASB has undertaken to test the guidance in its proposed disclosure framework. KPMG expressed general support for the Board’s objective to improve the effectiveness of defined benefit plan disclosures in the notes to the financial statements by facilitating clear communication of information that is most important to users of an entity’s financial statements, but commented on specific aspects of the proposal that require clarification or in which the usefulness of disclosures was unclear.
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost would require an employer to break out the service cost component from the other components of net benefit cost and present the other components outside income from operations, if reported. The proposal also would allow only the service cost component to be eligible for capitalization. KPMG expressed general support for the Board’s proposal to disaggregate the components of net benefit cost, but recommended that entities be permitted to elect a policy for the income statement classification of the other components of net benefit cost. KPMG also recommended that the Board clarify the proposed transition method.