By Matt Rosen
On July 8th the Financial Accounting Standards Board (FASB) released accounting standard update 2013-09 which indefinitely deferred required disclosures of nonpublic employee benefit plans investments in its plan sponsor’s equity. The deferral removes the requirement to disclose the quantitative measurements used to value the investment in the plan sponsor’s equity, relieving plans (such as Employee Stock Ownership Plans or ESOPs) from making publicly available certain information which could be considered proprietary information to the company.
The need for the deferral is the result of accounting standard update 2011-04 which required quantitative disclosures on all level 3 fair value investments in order to provide users of the statements additional information on these difficult to value investments. These requirements became effective for plan years beginning after December 15, 2011. Due to the financial statements of employee benefit plans being publicly available through the Department of Labor, this standard had the unforeseen consequence of making public the quantitative measurements used to value the private company. Concerns were voiced to the FASB and resulted in the indefinite deferral of the requirement, leaving only the requirement for disclosing qualitative descriptions of how the value was determined.
The deferral is effective immediately.