The Financial Accounting Standards Board.The Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). decided not to object to the American Institute of CPAs' plans to proceed with two projects that would amend the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). audit and accounting guide Audits of Employee Benefit Plans. A final SOP, Accounting and Reporting by Health and Welfare Benefit Plans, which would supersede To obliterate, replace, make void, or useless. Supersede means to take the place of, as by reason of superior worth or right. A recently enacted statute that repeals an older law is said to supersede the prior legislation. chapter 4 of Audits of Employee Benefit Plans, includes the following: * Defined benefit health and welfare plans should account for and separately report benefit obligations in the financial statements, including postretirement benefit obligations. Footnote disclosure is not appropriate. * Clarification of the requirement to recognize claims incurred but not reported Incurred but not reported (IBNR) is a term in common use in general insurance. When a policy of general insurance is written it will typically cover a 12 month period from inception of the policy. . * Benefit obligations should not include death benefits actuarially expected to be paid during the active service period of participants. * Defined contribution health and welfare plans are distinguished from defined benefit health and welfare plans. The SOP would be effective for audits of financial statements of single employer plans for plan years beginning after December 15, 1992, and multiemployer plans for plan years beginning after December 15, 1995, except for single employers with no more than 500 participants, for which the SOP would be effective for plan years beginning after December 15, 1994. Also, a proposed SOP, being developed at the request of the FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). , "would improve the consistency in the valuation of investment contracts in plan financial statements," according to the AICPA employee benefits plans committee. The project stems from a recent FASB exposure draft that proposes an amendment to FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting no. 35, Accounting and Reporting by Defined Benefit Pension Plans. In the exposure draft, the FASB tentatively concluded that investment contracts held by defined benefit plans should be reported at fair value, with insurance contracts being reported at contract value. The FASB then asked the AICPA to address the issue as it relates to defined contribution pension plans. The SOP's prospectus lists three goals: * Determine whether fair value or contract value for investment contracts is more relevant to financial statement users. * Eliminate as far as possible inconsistencies in reporting various investment contracts. * Provide auditors and preparers of benefit plan financial statements with guidance on how to determine the fair value of investment contracts. The proposed SOP is expected to be released for comment in early 1993 and a final version issued in late 1993. Guidance for determining the fair value of investment contracts may be issued as an appendix or as a separate document. Coming next month: The July Journal shows how CPAs can use desktop publishing to advantage, reviews the devastating dev·as·tate tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates 1. To lay waste; destroy. 2. To overwhelm; confound; stun: was devastated by the rude remark. effect of punitive damages Monetary compensation awarded to an injured party that goes beyond that which is necessary to compensate the individual for losses and that is intended to punish the wrongdoer. , interviews the chief financial officer of the United States and shows when vacation home Vacation Home A home separate from an individual's primary residence that is used for recreational purposes and may also be rented out at unused times. Notes: For tax purposes, those who rent their vacation homes may result in a lower amount of allowable expense losses can be deducted. |
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