Employee Future Benefits

BACKGROUND

The Accounting Standards Board (AcSB) is developing a standard for not-for-profit organizations (NFPOs) on accounting for employee future benefits that will be based on the new standard for Part II of the Handbook, except for different recognition and presentation requirements.

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This project has been undertaken by the AcSB in response to comments received on its January 2012 Exposure Draft, “Employee Future Benefits,” that were specific to not-for-profit organizations.   The project recognizes differences in the needs of users of financial statements between not-for-profit organizations and private enterprises.

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PROJECT NEWS

Basis for Conclusions – Reporting Employee Future Benefits by NFPOs – Section 3463
December 20, 2013. This document sets out how the AcSB reached its conclusions. As well, it sets out significant matters arising from comments received in response to its Exposure Draft and indicates how the Board dealt with the issues raised.

AcSB Decision Summary – October 9, 2013
The AcSB considered responses to its June 2013 Exposure Draft, “Reporting Employee Future Benefits by Not-for-Profit Organizations.” The AcSB decided that no changes to the Exposure Draft proposals were required as a result of feedback received from stakeholders. The AcSB approved the standard, subject to final drafting and a written ballot. 

The final standard is expected to be included in Part III of the Handbook before the end of the year. The final standard will be effective for fiscal years beginning on or after January 1, 2014, and earlier application will be permitted, but only for all of a not-for-profit organization’s benefit plans — consistent with Employee Future Benefits, Section 3462 in Part II of the Handbook.

Exposure Draft – Reporting Employee Future Benefits by Not-for-Profit Organizations
June 26, 2013.  The AcSB has issued an Exposure Draft proposing guidance for defined benefit plans on recognition and presentation of remeasurements and other items.  Stakeholders are encouraged to submit their comments, on the form provided, by August 27, 2013.

AcSB Decision Summary – May 14-15, 2013
The AcSB considered further the comments received on its January 2012 Exposure Draft, “Employee Future Benefits,” relating to not-for-profit organizations.  The AcSB approved for public comment a proposed new standard on reporting employee future benefits by not-for-profit organizations, subject to final drafting and a written ballot draft.

The exposure draft will propose adding a new Section to Part III of the Handbook that would require not-for-profit organizations to apply the new standard for private enterprises, Employee Future Benefits, Section 3462 in Part II of the Handbook.  However, remeasurements and other items would be presented in the statement of changes in net assets, rather than in the statement of operations.  Not-for-profit organizations would not reclassify remeasurements and other items from net assets to the statement of operations subsequent to their initial recognition.  The proposed new standard would be applied retrospectively in a similar manner to Section 3462 in Part II.

The AcSB decided that the exposure draft should not propose requirements for disclosures in addition to those required by Section 3462 in Part II, pending further research on the needs of users of not-for-profit organization financial statements.  On completion of that research, the AcSB plans to reconsider all disclosure requirements for not-for-profit organizations, including those relative to employee future benefits.

The AcSB expects to issue an exposure draft by the end of the second quarter of 2013 with a 60‑day comment period.  The final standard is expected to be included in the Handbook before the end of this year and will be effective for fiscal years beginning on or after January 1, 2014 — consistent with Section 3462 in Part II.

AcSB Decision Summary – January 16, 2013
The AcSB reviewed its plans for carrying out its December 2012 meeting decisions concerning the accounting for employee future benefits by not-for-profit organizations (NFPOs).  The new Part III standard is expected to be issued in time to be adopted for 2014 reporting, consistent with the timing of the new Part II standard.  Given that timing, the AcSB no longer sees a need for an interim standard for NFPOs. 

As a result, NFPOs applying Part III of the Handbook will apply the existing requirements in Section 3461, Employee Future Benefits, in Part II for fiscal years beginning on or after January 1, 2012.  Section 3461 permits NFPOs to account for defined benefit plans using the deferral and amortization approach, which was used when accounting under the pre-changeover standards in Part V, or the immediate recognition approach. 

The disclosure requirements in Section 3461 in Part II of the Handbook are significantly reduced from those in Section 3461 in Part V.  Subject to comments to be received on exposure, the AcSB intends to include disclosure requirements in the new Part III standard that are substantially similar to those in Section 3461 in Part V.  The AcSB encourages NFPOs to continue to provide the disclosures required by Section 3461 in Part V, to the extent that these disclosures are not included in Section 3461 in Part II.

AcSB Decision Summary – December 12, 2012
The AcSB considered comments relating specifically to not-for-profit organizations (NFPOs) on its January 2012 Exposure Draft, “Employee Future Benefits.” The AcSB decided that NFPOs should apply the new standard, when issued, except that they should:

  • present remeasurement and other items as a separate component of changes in net assets; and
  • continue to make disclosures substantially similar to the disclosures required by Section 3461, Employee Future Benefits, in the pre-changeover standards in Part V of the Handbook. 

The AcSB plans to issue an exposure draft on these matters in 2013.

In the interim, the AcSB has decided to provide NFPOs applying Part III of the Handbook with the option to continue to apply the requirements in Section 3461, Employee Future Benefits, in Part V. That Section will be included in Part III of the Handbook by reference for that purpose. Organizations choosing to adopt the corresponding standard in Part II of the Handbook would likely be required to make further changes when the AcSB adopts a final standard on reporting employee future benefits by NFPOs. Accordingly, the AcSB encourages NFPOs to continue to provide the full disclosures required by Section 3461 in Part V.

AcSB Decision Summary – November 7-8, 2012
The AcSB’s January 2012 Exposure Draft, “Employee Future Benefits,” proposed amendments to standards for private enterprises that have the potential to affect some not-for-profit organizations applying Part III of the CICA Handbook – Accounting.  The AcSB considered comments received on the Exposure Draft relating specifically to not-for-profit organizations.  Discussion of the application of the revised standard to not-for-profit organizations will continue at the AcSB’s December 12, 2012 meeting.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.