On July 8, 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-09, Fair Value Measurement (Topic 820), Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04. This final standard provides an indefinite deferral for certain quantitative fair value disclosures for nonpublic employee benefit plans.
The standard indefinitely defers the requirement for nonpublic employee benefit plans to disclose quantitative information about the significant unobservable inputs used in Level 3 fair value measurements1 of investments in the plan sponsor’s (and its nonpublic affiliates’) nonpublic equity securities. The standard does not defer the effective date for these quantitative disclosures for other nonpublic entity equity securities held in the nonpublic employee benefit plan and does not impact any of the qualitative disclosures required by ASU No. 2011-04.
In issuing the deferral, the FASB allowed additional time to weigh stakeholder concerns regarding the cost/benefit of the dissemination on the benefit plan’s regulator’s website of potentially proprietary information.
The standard does not impact the existing exemption from certain other fair value disclosures2 for nonpublic entities (as defined in the Master Glossary of the Codification)3.
The deferral applies only to certain employee benefit plans reporting under U.S. GAAP. There is no corresponding deferral for entities reporting under IFRS.
The standard applies to all benefit plans except those subject to the Securities and Exchange Commission's filing requirements.
Although the exposure draft4 proposed a new Master Glossary Term, nonpublic employee benefit plan, the final standard does not define that term. The FASB decided not to provide a definition because of the confusion that respondents indicated may have arisen about the applicability of the proposed definition in either ASC 820 or other ASC topics. To clarify that it does not apply to other ASC topics, the final standard does not use a defined term, but instead describes these employee benefit plans without using the term nonpublic employee benefit plan.
The deferral is effective upon issuance for financial statements that have not been issued.
PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact the Financial Instruments team in the National Professional Services Group (1-973-236-7803).
3Any entity that does not meet any of the following conditions:
a. Its debt or equity securities trade in a public market either on a stock exchange (domestic or foreign) or in an over-the-counter market, including securities quoted only locally or regionally.
b. It is a conduit bond obligor for conduit debt securities that are traded in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local or regional markets).
c. It files with a regulatory agency in preparation for the sale of any class of debt or equity securities in a public market.
d. It is required to file or furnish financial statements with the Securities and Exchange Commission
e. It is controlled by an entity covered by criteria (a) through (d).
4 Refer to In brief 2013-23, FASB proposes to defer quantitative disclosures for nonpublic employee benefit plans.