In September, National FCA reported on proposed Financial Accounting Standards Board (FASB) accounting standards and reporting changes aimed at increasing the disclosure of loss contingencies (Exposure Draft, Contingencies (Topic 450): Disclosure of Certain Loss Contingencies related to potential withdrawal liability, even though the employer viewed the likelihood of incurring that liability as remote or slight.  FASB released an additional exposure draft in September that would require multiemployer plan sponsors to provide a narrative description of their exposure to liability to the multiemployer plans.
 

In the past week several new developments have occurred. FASB, at its October 27, 2010 meeting, postponed the loss contingency standard indefinitely after receiving a barrage of critical comment letters. The Exposure Draft, Contingencies (Topic 450): Disclosure of Certain Loss Contingencies, had proposed that public entities would begin providing enhanced disclosures in financial statements for fiscal years ending after December 15, 2010. The Board decided that a final standard will not be effective for the 2010 calendar year-end reporting period. It will decide on an effective date at a future meeting, after it has substantially concluded its redeliberations.
 

Additionally, the Campaign for Quality Construction (CQC) a coalition of six national contractor associations including National FCA, Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), National Electrical Contractors Association (NECA), Mechanical Contractors Association of America (MCAA), The Association of Union Constructors (TAUC), and International Council of Employers of Bricklayers and Allied Craftworkers (ICE), sent an expert advisory panel for a private meeting to FASB on October 29, 2010 to discuss FASB's recent multiemployer defined benefit pension plan disclosure rules - Exposure drafts 450 and 715.  The meeting was held with the two FASB Board members and two professional staff.  The CQC meeting with FASB explored many of the issues relating to both ED450 and 715, and it is expected that the FASB staff will propose a similar delay in Exposure Draft 715-80 at an upcoming November 10th Board meeting.
 

National FCA and the Campaign for Quality Construction is planning on further direct collaboration with FASB in the interim period.

On July 20, 2010, FASB published an Exposure Draft addressing employer reporting of potential loss contingencies regarding its withdrawal from multiemployer plans (the "Loss Contingency Exposure Draft").

The new proposal will require significantly more employers to report potential withdrawal liability without regard to the practical probability that it will be incurred and without regard to whether an exception to the assessment of withdrawal liability is available under ERISA.

Not only do the contemplated changes require the provision of additional quantitative information which is stale, expensive to present, and misleading, it also asks for speculative qualitative statements regarding expected future increases and the presentation of funding scenarios which are being merely "considered." Specifically, the FASB staff recommended the following changes be included in the FASB Multiemployer Exposure Draft and the board has approved their recommendations:

1. Expected future trends in contributions, if known, including the extent to which a surplus or deficit in the plan may affect future contributions;
2. A narrative description, including the expected effect, of any funding improvement plan or rehabilitation plan. For plans in regulatory warning zones (for example, "critical" or "endangered" status as defined by the Pension Protection Act of 2006) the warning status and possible remedies being considered by the plan, if known;
3. A narrative description of the entity's exposure to significant risks arising from its participation in the plan, for example the extent to which the entity can be liable to the plan for other participating employers' obligations under the terms and conditions of the plan, the entity's inability to influence the plan's investment decisions and consequences the entity might face if it ceased contributing to the plan; and
4. Details of any agreed deficit or surplus allocation on wind-up and, if applicable and available, the amount that is required to be paid on withdrawal as of the most recent date available. For plans where the amount required to be paid on withdrawal is applicable, but not available, an entity shall provide information about the magnitude of those plans (such as the percentage of the multiemployer plan contributions to such plans, or percentage of participants covered by such plans). The IASB Exposure Draft suggests even broader changes regarding both qualitative and quantitative information, regardless of whether that information is available to the employer. Due to the convergence of international accounting standards, both the FASB and IASB proposals need to be addressed.

Below are comments that National FCA and the Quality Construction Alliance (QCA) submitted to FASB regarding FASB's Standards Proposal.