Materiality out in postretirement statements.

The Financial Accounting Standard Board issued a new statement, Employers' Disclosures about Pensions an Other Postretirement Benefits, which changes disclosure rules for public an private companies. (See "Postretirement ED Reforms Disclosure Rules," JofA, Aug.97, page 15.) The key change from the exposure draft is the elimination of the materiality test, according to FASB Practice Fellow Mark Neagle. "The ED said certain nonpublic companie's might be allowed to use a reduced disclosure set The final statement makes a simple public-nonpublic distinction, however. The board believes the more rigorous disclosure standards provide greater information but recognize some information just isn't useful to everyone. Only public companies are required to make a full set of disclosures."

Another significant change from the ED, according to Neagle, deals with the drafts elimination of some requirements in Statements no. 87, Employers' Accounting for Pensions, and no. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, to present the components of benefit cost. "Some comment letters suggested that in our effort to eliminate certain disclosures, we were going overboard, so those provisions have been renstated in the final statement."

Sensitivity remains sensitive

When the board approved the ED, the staff suggested that sensitivity analysis would prove the most controversial aspect of the statement, and according to Neagle, that was the case. The ED proposed disclosure of the effects of an increase and decrease in the long-term health care trend rate. "Some who commented wondered whether that was useful information," said Neagle. "However, the board believes that this disclosure is important, and, accordingly, it remains in the final statement."

This statement is effective for fiscal years beginning after December 15, 1997, with earlier application encouraged. To order a copy, call the FASB order department at 203-847-0700, ext. 555.