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Employee Benefit Plans Excluded from Disclosure Framework

As the Financial Accounting Standards Board (“FASB”) moves forward with finalizing its disclosure framework, the board has decided to exclude employee benefit plans from the guidance. Agreed upon at its October 4 meeting, the FASB said confirmed that employee benefit plans will not be evaluated similarly as other entities when the board decides whether they are required to disclose certain information.

The decision was based on the FASB’s belief that an employee benefit plan’s financial statements and its users are significantly different from organizations to allow for possibly different reporting considerations. While most FASB members agreed with this sentiment, Christine Botosan believed that the decision to exclude the employee benefits plan guidance did not align with the board’s efforts to finish the guidelines that help it be consistent with making standard-setting decisions, better known as the Conceptual Framework. Botosan further stated that while she doesn’t view the exclusion as a huge issue, it creates an inconsistency in the entire scope of the Conceptual Framework.

The FASB’s disclosure framework project began three years ago with the release of Proposed Statement of Financial Accounting Concepts No. 2014-200, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements. The draft guide aims to help the FASB establish consistent footnote requirements when developing accounting standards. The proposal also recommends factors that should be considered when the FASB decides on the value of a disclosure requirement.

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