Statements of Position

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Description

This proposed Statement of Position (SOP) would amend chapters 2, 3, and 4 of the AICPA Audit and Accounting Guide Audits of Employee Benefit Plans (the Guide) with conforming changes as of May 1, 1998. This proposed SOP specifies the accounting for and disclosure of 401(h) features of defined benefit pension plans, by both defined benefit pension plans and health and welfare benefit plans. The proposed SOP requires: a. Defined benefit pension plans to record assets held in a 401(h) account related to health and welfare plan obligations for retirees as both assets and liabilities on the face of the statement of net assets available for pension benefits in order to arrive at net assets available for pension benefits. b. 401 (h) account assets used to fund health and welfare benefits, and the changes in those assets, to be reported in the financial statements of the health and welfare benefit plan. Benefit obligations related to the 401(h) account are also required to be reflected in the health and welfare plan financial statements. c. Defined benefit pension plans to disclose in the notes to the financial statements the nature of the assets related to the 401(h) account, and the fact that the assets are available only to pay retirees' health benefits. d. Health and welfare benefit plans to disclose in the notes to the financial statements the fact that retiree health benefits are funded partially through a 401 (h) account of the defined benefit pension plan. This proposed SOP is effective for financial statements for plan years beginning after December 15, 1998. Earlier application is encouraged. Accounting changes adopted to conform to the provisions of this proposed SOP shall be made retroactively. Financial statements of prior plan years are required to be restated to comply with the provisions of this proposed SOP only if they are presented together with the financial statements for plan years beginning after December 15, 1998. If accounting changes were necessary to conform to the provisions of this proposed SOP, that fact shall be disclosed when financial statements for the year in which this proposed SOP is first applied are presented either alone or with financial statements of prior years.

Publication Date

1998

Relational Format

Book

Keywords

Defined benefit pension plans -- Accounting -- Standards -- United States

Disciplines

Accounting | Taxation

Comments

Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statement of position : Accounting for and reporting of 401(h) features of defined benefit pension plans : (proposed amendment to the AICPA audit and accounting guide, Audits of employee benefit plans);Accounting for and reporting of 401(h) features of defined benefit pension plans : (proposed amendment to the AICPA audit and accounting guide, Audits of employee benefit plans); Exposure draft (American Institute of Certified Public Accountants), 1998, Sept. 9

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