SFAS 158 What has FASB Fashioned?.


43 views
Uploaded on:
Category: People / Lifestyle
Description
Representative Benefits Spring Meeting. 8. Total of arrangements: Company A ... Representative Benefits Spring Meeting. 15. Extra changeless revelation necessities. Sum ...
Transcripts
Slide 1

SFAS 158 What has FASB Wrought? John Stokesbury Josh Bank CCA/SOA EB Spring Meeting May 31, 2007

Slide 2

SFAS 158 - Topics Expense Footnote exposures Measurement dates Remeasurements and rollforwards Reconciliations of OCI and financed status Interim reporting International issues Case study Q&A 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 3

Expense at first glance, SFAS 158 does not change estimation of net occasional advantage (cost) One conceivable special case is the manner by which organizations with remote arrangements may represent outside cash interpretation of unrecognized increases/misfortunes, earlier administration expenses and move sum when they are amortized into cost this issue will be talked about in the International Issues area 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 4

Footnote divulgences No real (principal) new estimations Balance sheet revelation of subsidized status Aggregation of arrangements Current versus non-current resources & liabilities Elimination (redefinition) of accumulated/(paid ahead of time) annuity cost Transitional exposures and accounting Permanent changes to revelations Adjustment to held income upon change in estimation date (next segment) 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 5

No major new estimations Fundamental components of reference data are essentially the same Displayed distinctively and in better places (and with some diverse names) Accrued/(Prepaid) Pension Cost no more appeared… they\'ve been supplanted by subsidized status (current+noncurrent obligation or noncurrent resource) It\'s somewhat harder (and less demanding) to affirm that the commentary "parities". Pre-158 recursion equation was (generally) ABL/(PBC) 0 +NPPC-Contrib+ Δ AML=ABL/(PBC) 1 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 6

Disclosure of supported status Balance sheet exposure of subsidized status Essentially, a change in accordance with value approach (as a rule) to unrecognized amortization parities In different cases, the hit to value is only the overabundance of PBO over ABO Also may lose an impalpable resource, yet who ever missed an immaterial resource? Four essential accounting report segments are killed, and three new ones are presented (one has the same name however is reclassified) 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 7

Aggregation of arrangements Pension and OPEB numbers must be indicated independently. Generally numbers can be collected or disaggregated freely (inside reason) However, dependably need to reveal, either expressly or through the way you total: ABO and resources for ABO-unfunded arrangements PBO and resources for PBO-unfunded arrangements Old propensities may stalwart, or not in any way US versus non-US arranges Qualified versus non-qualified arrangements What do your customers\' divulgences resemble? 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 8

Aggregation of arrangements: Company A . 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 9

Aggregation of arrangements: Company A . 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 10

Aggregation of arrangements: Company A . 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 11

Current and noncurrent liabilities, (Current?) and noncurrent resources Surplus (=Asset on Balance Sheet) Always Noncurrent? A couple of substantial managers have interpretted Paragraph 8(o) – Expected inversion amid up and coming 12 months – as present resource Deficit (=Liability on Balance Sheet) Current risk: Excess (assuming any) of the present estimation of expected advantage installments in taking after 12 months over resources (take note of this is a moving 12 months) Non-qualified (and qualified unfunded non-US) annuity arrangements and OPEB arranges Unfunded OPEB arranges whatever is left of the deficiency is Noncurrent risk 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 12

Current versus noncurrent resources/liabilities Example 1 Benefit Obligation: ($300) Assets: $100 Funded Status: ($200) Expected Benefit Payments: $50 The organization groups the whole $200 obligation as a noncurrent risk subsequent to the reasonable estimation of the arrangement\'s advantages is adequate to cover the present estimation of expected advantage installments throughout the following 12 months. 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 13

Current versus noncurrent resources/liabilities Example 2 Benefit Obligation: ($240) Assets: $40 Funded Status: ($200) Expected Benefit Payments: $50 The organization ought to record a present risk of $10 and a noncurrent obligation of $190. 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 14

Additional perpetual divulgence prerequisites Amount of net increase or misfortune and earlier administration cost or credit perceived in OCI, isolated into two classifications: Amounts emerging amid the period Amounts accordingly perceived as parts of net occasional advantage cost Amount of any move resource or commitment perceived as a segment of net intermittent advantage cost 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 15

Additional lasting revelation necessities Amount of unrecognized move commitment/resource incorporated into gathered OCI Estimated bit of each unrecognized thing that will be perceived in cost for the following monetary year Amount and timing of any arrangement resources anticipated that would be come back to the element amid the following financial year 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 16

Additional Transitional Disclosure Requirements Incremental impact of applying FAS 158 on individual details in year-end accounting report (just required in beginning year of selection of FAS 158) Adjustments to held profit and collected OCI for change in estimation date (just required in introductory year of adjusting estimation date to monetary year-end) 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 17

Measurement dates Must now harmonize with backer\'s year-end Details of early appropriation are advancing May need to act in Q1 of move year Transition for change in estimation date Remeasurement strategy "15-month" technique Significant occasions amid "crevice" period 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 18

Measurement date move Two choices Dual Measurement: Calculate cost for period between old estimation date and monetary year-end (conformity to held income) and afterward remeasure again at year-end to compute yearly cost "15-month" Alternative (e.g. logbook monetary and Sept 30 estimations): Use comes about at old estimation date to decide net occasional advantage cost for next 15 months. Three-fifteenths of this is acclimation to held profit and twelve-fifteenths is net intermittent advantage cost 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 19

Measurement date move Curtailments and Settlements If happen between estimation date and monetary year-end, impacts are perceived in income when brought about and not in change in accordance with held income Might trigger extra estimation dates before arrangement If move at December 31, 2008, then 2008 would catch 15 months of unique occasions 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 20

New information remeasurements Yearend estimations in light of start of year information Following year cost taking into account new enumeration information What suppositions are utilized as a part of redesigned estimations? What cost is recorded before overhauled comes about? How does OCI reflect overhauled comes about? 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 21

December 31, 20X6 $200 $40 (est.) Remeasurement case January 1, 20X7 $205 $44 Benefit Obligation 20X7 NPPC 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 22

Remeasurement case (cont\'d) January 1, 20X7 Benefit Obligation increments by 5 (around 2.5% distinction – inferable from demographic experience) Service Cost and Interest Cost change Unrecognized Loss increments by 5 Corridor and Amortization Amount change Charge to Other Comprehensive Income increments by 5 (Equity diminished by 5) May be a huge change in Equity 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 23

Remeasurement case (cont\'d) 20X7 NPPC 1Q and 2Q expensed 25% of 40, Updated brings about mid 3Q YTD Accrual is 20 YTD Accrual ought to be 21 How to reflect contrast? 3Q and 4Q will every cost 25% of 44 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 24

Amendments to SFAS 87/106 Basis for Discount Rate Added section 44A (and 31A, SFAS 106), held passage 44 (and 31, SFAS 106) Implementation Guides (FSP 158-1) Incorporated into "A" level direction Amendments to comply with SFAS 158 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 25

Reconciliations of OCI and subsidized status From accumulated/prepaid annuity expense to prepaid advantage cost/collected advantage obligation to supported status Reconciliation of OCI Reconciliation of financed status Interplay between cost, supported status and OCI Formal exposure necessities versus inside checking instruments 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 26

Reconciliations of subsidized status Fundamental (direct) technique: (FS 1 ) = (FS 0 ) + (Service cost) (Interest cost) Expected profit for resources Contributions (Losses)/picks up on commitments and resources Other occasions that influence advantage commitment If no additions/misfortunes or huge occasions this is only a standard rollforward of advantages and commitments 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 27

Reconciliations of financed status "Gathered/paid ahead of time" strategy: (FS 1 ) = (FS 0 ) + (NPPC) Contributions. Done… aside from that… You then need to pull out specific components that don\'t influence financed status, and include others that do This can be to some degree murky, yet the style and minimization can be justified, despite all the trouble Let\'s look at/differentiation the old gathered/prepaid recursion equation with the subsidized status compromise (see taking after slides and/or Excel outline) 2007 CCA/SOA Employee Benefits Spring Meeting

Slide 28

Reconciliations of supported status The principal slide demonstrates the majority of the points of interest of this "

Recommended
View more...