Response to FASB Exposure Draft, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans: An Amendment of FASB Statements No. 87, 88, 106, and 132(R)"

This paper summarizes the Financial Accounting Standards Committee of the American Accounting Association's (the Committee) response to the Financial Accounting Standards Board's (FASB) Exposure Draft, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans: An Amendment of FASB Statements No. 87, 88, 106, and 132(R)" (hereafter, the ED). The primary effect of the ED is to recognize the funded status of defined benefit postretirement plans in the statement of financial position. The Committee believes that the changes to pension accounting proposed in the ED will improve the accounting for pension and other postretirement obligations. Based on prior research, this paper expects that investors will find the balance sheet presentation of the funded status of these obligations to be more useful than the pension-related reconciliations currently found in the footnotes. Finally, to ensure consistent and comparable reporting, the FASB should provide additional implementation guidance.