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Full disclosure: Pension and other postemployment benefits · PwC's accounting podcast

• 0:00
  SPEAKER_00: Thought Leadership from PWC.
• 0:07
  SPEAKER_03: Welcome to PWC's Accounting Podcast.
• 0:10
  SPEAKER_03: I'm Heather Horn.
• 0:11
  SPEAKER_03: Thanks for tuning in to the next episode on our full disclosure summer series, a show all about presentation and disclosure from the top of the financial statements down to the last footnote.
• 0:21
  SPEAKER_03: While it may sound like accounting 101, I guarantee you'll learn something new each episode.
• 0:27
  SPEAKER_03: Today's focus pension obligations and plan assets.
• 0:33
  SPEAKER_02: There's both some broad objectives, but also a lot of very specific requirements in the guidance for pension disclosures.
• 0:41
  SPEAKER_01: Almost every company that's got one of the pension or open plans is going to be using a third-party actuary to assist, so making sure you're coordinating and working with them as early in the process as possible.
• 0:51
  SPEAKER_03: Those are my guests, Jay Sulliver and Ken Stoller, both P2BC National Office partners.
• 0:56
  SPEAKER_03: I hope you tuned in for their recent episode on StopComp, because I'm so happy to have them back on the show.
• 1:02
  SPEAKER_03: Pension disclosures can be some of the largest.
• 1:05
  SPEAKER_03: And if you're unfamiliar with the basics of pension accounting, it can be difficult to understand the various disclosures and why they're important.
• 1:12
  SPEAKER_03: That's why Jay, Ken, and I are here to break it all down and help listeners understand how to think about this topic.
• 1:18
  SPEAKER_03: So stick around.
• 1:24
  SPEAKER_03: Jay, Ken, thanks so much for joining me today.
• 1:26
  SPEAKER_03: Looking forward to our conversation about pensions, as Jay well knows and from the power and utilities industry.
• 1:33
  SPEAKER_03: And pensions are a big thing still within that industry.
• 1:37
  SPEAKER_03: And uh, you know, when you talk about pages, the disclosures between pensions and then other post-employment benefits.
• 1:44
  SPEAKER_03: Definitely lots of disclosures there and a lot of detail that if you don't understand the pension accounting standard very well, I think it's sometimes hard to understand some of those disclosures and why they're important.
• 1:55
  SPEAKER_03: So, Jay, I know this has been around for a while, but can you just give us an overview on how, like big picture, how to think about presentation of these costs?
• 2:05
  SPEAKER_02: Sure.
• 2:05
  SPEAKER_02: And maybe I'll preface this discussion uh by saying that we're today we're only going to really talk about single employer defined benefit plans here, uh, since those tend to have the most detailed and complex requirements.
• 2:20
  SPEAKER_02: There are separate accounting and disclosure requirements for things like defined contribution plans or multi-employer plans that certainly listeners can look to in the guidance and some of the resources that we'll reference later on, but we're not going to talk about those today.
• 2:35
  SPEAKER_02: Uh so but when we think about defined benefit plans, uh pension plans, and other post-employment benefit costs or OPEB plans, uh there's uh six accounting components that are described for what makes up the cost.
• 2:49
  SPEAKER_02: That includes service cost, interest cost, the expected return on plan assets, amortization of any prior service cost or credits, the recognition or amortization of any previous gains and losses, and then for some companies, anyway, still an amortization of the original transition amount when they first adopted the guidance.
• 3:11
  SPEAKER_02: And probably won't want to get into what all the accounting and calculation aspects of those are, although we have talked about those in other podcasts, including one we did back in November of 2019 on pension back to basics.
• 3:28
  SPEAKER_02: Uh, but once you have those info that information in terms of how it gets presented on the income statement, there was some guidance that came out a few years ago that split the total amount of pension and OPED costs into two buckets.
• 3:42
  SPEAKER_02: So the first category is just service cost, and that reflects the value of current year's service by employees based on how much additional pension benefit they're earning by working during the year.
• 3:57
  SPEAKER_02: That amount is viewed like any other kind of compensation costs paid to those employees, and it has to be included in the line that it belongs in, and it would have to be included in operating income, income from operations if a company presents that.
• 4:12
  SPEAKER_02: And then the other category is all the other five components of the cost that I mentioned.
• 4:18
  SPEAKER_02: Those have to be presented separately from the service cost in either one or more lines.
• 4:24
  SPEAKER_02: And if a company does have an income from operations category, they have to specifically have to be outside of operating income.
• 4:33
  SPEAKER_01: Jay, in practice, I've seen companies do it both ways.
• 4:36
  SPEAKER_01: So some companies will combine those pension costs with other items in a general caption like other income or loss.
• 4:45
  SPEAKER_01: Uh, and then there'll be some footnote disclosure of the pension component within that line.
• 4:49
  SPEAKER_01: Uh, and then other companies will include it as a separate line and label it something like non-service pension cost or benefit or something like that.
• 5:00
  SPEAKER_02: Right.
• 5:00
  SPEAKER_02: Yeah, there is definitely some flexibility as to how to present these other costs, but at least the key point is it has to be in a different place than where service costs are recorded.
• 5:11
  SPEAKER_02: And as we said, it has to be outside of operating income if a company presents that.
• 5:16
  SPEAKER_02: You can split it into more than one line if you want, like you could put the interest cost with interest expense and the return on assets with investment income, things like that.
• 5:26
  SPEAKER_02: But if you do that, then you would have to disclose in the footnotes where it's all reflected on the income statement.
• 5:32
  SPEAKER_02: Then one other kind of nuance to it, and other kinds of costs that we tend to run into with pension and OPEP are things like curtailments and settlements or termination benefits that that follow the pension guidance.
• 5:46
  SPEAKER_02: Uh, those should also be viewed as sort of one of these other components and presented outside of operating income as well.
• 5:53
  SPEAKER_03: All right.
• 5:54
  SPEAKER_03: So, Jay, I have to go back.
• 5:55
  SPEAKER_03: You said there's six lines.
• 5:57
  SPEAKER_03: And the last one was amortization of transition.
• 6:00
  SPEAKER_03: And you said that was from original adoption.
• 6:03
  SPEAKER_03: So if I remember correctly, this was FAS 87 and FAS 88.
• 6:07
  SPEAKER_03: So when was that?
• 6:09
  SPEAKER_03: And do we still see these amounts, or is that gone?
• 6:12
  SPEAKER_02: I would say on the pension one, your your your um historical references are are good on the pension side, which was from the the late, the late 1980s, right?
• 6:20
  SPEAKER_02: So most of the pension ones are gone, but 106 came in a little bit later.
• 6:24
  SPEAKER_02: I would say even for that, we for the most part have seen that all amortize away at this point, but there's still the occasional company that might still have a very long transition amortization period from uh the OPEB cost in FAS 106.
• 6:37
  SPEAKER_02: That's right.
• 6:37
  SPEAKER_03: Hmm, interesting.
• 6:38
  SPEAKER_03: When was FAS 106?
• 6:39
  SPEAKER_01: Ooh, that's the stumper.
• 6:40
  SPEAKER_03: So you guys remember?
• 6:41
  SPEAKER_03: We'll have to look it up.
• 6:42
  SPEAKER_01: So 1992.
• 6:44
  SPEAKER_03: Oh, there you go.
• 6:45
  SPEAKER_03: All right, thank you.
• 6:46
  SPEAKER_01: You you better fact check that.
• 6:49
  SPEAKER_03: We'll we'll confirm.
• 6:53
  SPEAKER_03: Fact check.
• 6:54
  SPEAKER_03: FAS 106 was issued in December 1990 and effective for fiscal years beginning after December 15th, 1992.
• 7:04
  SPEAKER_03: So I'd say Ken was close, but not quite.
• 7:10
  SPEAKER_03: All right, very good.
• 7:12
  SPEAKER_03: So then um, now let me get us back on track, what we should we should be talking about.
• 7:16
  SPEAKER_03: So uh Jay, I know we also talked uh about some of the presentation of gains and losses in our podcast on comprehensive income and stockholders' equity.
• 7:26
  SPEAKER_03: Uh so we won't get into more of that there.
• 7:29
  SPEAKER_03: But Ken, what about the balance sheet and presentation on the balance sheet?
• 7:34
  SPEAKER_01: Yeah, so um balance sheet presentation for pension and OPEB is unique from my perspective because the liability or the pension obligation and the pension or OPEB assets are shown net against each other.
• 7:51
  SPEAKER_01: They're offset.
• 7:53
  SPEAKER_01: So it's not at all uncommon that we might have a company, you know, it's got a pension obligation of hundreds of millions or billions of dollars, but the balance sheet might show a very small liability or it might even be in a net asset position because we're setting it off against the plan assets.
• 8:13
  SPEAKER_01: So that's pretty unique.
• 8:15
  SPEAKER_01: But where we don't do netting, and I found that this can be a bit of a sleeper issue for some, is if we have certain plans, because many companies will have multiple pension and multiple OPEB plans.
• 8:28
  SPEAKER_01: If we've got certain plans that are in a net asset position and others in a net liability, those we shouldn't be off saying against each other.
• 8:36
  SPEAKER_01: So we will show the net asset for those plans in net asset position and vice versa.
• 8:41
  SPEAKER_01: And then you mentioned kind of the OCI treatment for pension accounting.
• 8:45
  SPEAKER_01: Yeah, we've got these uh very unique delayed recognition rules in pension accounting, and so certain things like gains and losses or plan amendments.
• 8:57
  SPEAKER_01: Uh, the impact usually isn't recognized immediately in the PL.
• 9:02
  SPEAKER_01: So it's deferred in OCI and then amortized over, you know, potentially many, many years.
• 9:08
  SPEAKER_01: So on the balance sheet, we'll typically see pension balances in accumulated other comprehensive income for those companies that have pension and OPEB.
• 9:18
  SPEAKER_01: One other note for companies with classified balance sheets, pension and OPEB liabilities are non-current unless the expected benefit payments over the next 12 months are in excess of the plan assets for that plan.
• 9:38
  SPEAKER_01: So picture plan has$100 of assets, and over the next year we expect$20 of benefit payments.
• 9:47
  SPEAKER_01: So in that case, there would be no current liability because the expected payments are not in excess of the total assets in the fund.
• 9:56
  SPEAKER_01: So typically this will come into play, usually with a um with an unfunded plan.
• 10:00
  SPEAKER_01: So maybe many OPED plans, you know, post-retirant healthcare plan, for example, is unfunded.
• 10:06
  SPEAKER_01: And so in my example, if we had$20 of expected payments over the next year, that 20 would be reflected as a current liability because there are no plan assets.
• 10:17
  SPEAKER_01: And I'll just mention another sleeper issue in this area is that when we're talking about the expected payments over the next 12 months, it's not the amounts that the company is expecting to contribute into the plan.
• 10:33
  SPEAKER_01: It's the amounts that are expected to be paid to plan participants or retirees over the next year.
• 10:40
  SPEAKER_01: Uh and then finally, for those plans that are in a net asset position, that's always non-current.
• 10:45
  SPEAKER_01: We're never showing a current asset, or almost never showing it.
• 10:49
  SPEAKER_01: It is possible, but I won't know a little, a little too detailed for this conversation.
• 10:52
  SPEAKER_01: So almost always uh non-current if we're in a net asset position.
• 10:56
  SPEAKER_03: Okay, now I'm curious, but we could talk about that offline.
• 10:59
  SPEAKER_01: So sure.
• 11:01
  SPEAKER_03: So then, Jay, I gave a prelude to this that there's a lot of disclosures in this area.
• 11:07
  SPEAKER_03: So, what are some of the highlights that you could give us?
• 11:09
  SPEAKER_02: Well, you're right.
• 11:10
  SPEAKER_02: There are uh interesting, there's both some broad objectives, but also a lot of very specific requirements in the guidance for pension disclosures.
• 11:20
  SPEAKER_02: Maybe I'll start with the objectives, and I'd probably break those down to four key ones.
• 11:25
  SPEAKER_02: Uh the first one is helping readers understand how the benefit obligations and plan asset values are determined and how they changed during the period, because those are often big numbers.
• 11:38
  SPEAKER_02: The second is what key assumptions and judgments were used in coming up with those amounts and maybe the risks associated with those changing.
• 11:49
  SPEAKER_02: Next is where all the amounts are reflected in the financial statements, since, as we've kind of talked about, they could be kind of mixed all over the place and usually not on their own separate line item because they're part of some broader uh accrual for payroll and employee-related benefits accruals.
• 12:06
  SPEAKER_02: And then finally, what is the potential impact on the company's future cash flows, such as for funding needs or benefit payments off into the future?
• 12:16
  SPEAKER_02: So, although interestingly, not this isn't specifically required, but what we usually do see a company uh starting out with is a general description of the defined benefit plans that it sponsors, really to help users understand the current and future impact that they may have on the financials.
• 12:37
  SPEAKER_02: And that would be things like the nature of the plans, the benefits that are being provided to people, the employee groups that are entitled to those benefits, what regulatory environment like ERISA or other countries' regulatory environments might apply if they're material, and maybe a description of the really key risks that the plans may expose the company to.
• 12:58
  SPEAKER_02: Now, maybe moving out of the objectives into the more specific requirements, the guidance requires a company to disclose the breakdown of the six components of pension cost that I mentioned earlier, like service cost and interest cost and amortization for each period that an income statement is presented.
• 13:17
  SPEAKER_02: So while they're all shown together or into two places on the income statement, you do have to show all of those components and curtailments and settlements as well, uh broken down in detail in the footnote.
• 13:29
  SPEAKER_02: You also have to disclose where the pension-related amounts are recognized on each balance sheet presented.
• 13:34
  SPEAKER_02: You know, as Ken was saying, they might be in different places.
• 13:37
  SPEAKER_02: Uh, you have to show separately the net assets, the liabilities, as well as the gross funded status, meaning the total benefit obligation and the total amount of assets kind of broken up in certain categories.
• 13:50
  SPEAKER_01: Yeah, and Jay, there there are also significant disclosure requirements related to kind of the roll forwards of uh the pension and OPEB obligations, as well as the pension plan assets showing you know all of the things that can impact the liability or the assets over the course of the year.
• 14:13
  SPEAKER_01: And there are a lot of those, you've mentioned many already, but it's things like uh service cost recognized during the year, interest cost, gains and losses on the obligation, gains and losses on the plan assets, uh, any benefit payments that were made, um contributions into the plan, uh, and then a whole host of like less frequent items, but things that still definitely come up, whether it's curtailments or settlements or plan amendments or acquisitions or divestitures.
• 14:48
  SPEAKER_01: So there's there's a lot in these roll forwards, and you I they can take up pages of the pension footnote just in those roll forwards themselves.
• 14:57
  SPEAKER_03: Well, and I think Ken, this is where the actuaries report becomes very important.
• 15:01
  SPEAKER_03: And perhaps we'll have to have another episode just walking through how you look at some of those reports.
• 15:05
  SPEAKER_03: I know that's something you can help us with uh with your former role that you used to have.
• 15:10
  SPEAKER_03: So good idea.
• 15:12
  SPEAKER_03: Another question that I have, and this is something Jay alluded to, is that you know, in many cases, the companies will have multiple of these plans and sometimes multiple in the US.
• 15:21
  SPEAKER_03: That's what I've commonly seen, but also they might even have plans maybe in the US and outside the US.
• 15:27
  SPEAKER_03: So, what are some of the specific things that companies should think about when they have more than one plan?
• 15:32
  SPEAKER_01: Right.
• 15:33
  SPEAKER_01: So uh as a general rule, if we've got pension plans, we should be showing those separate from OPEB plans.
• 15:43
  SPEAKER_01: But multiple pension plans can be aggregated.
• 15:48
  SPEAKER_01: But if we've got US plans and foreign plans, which is very common with our multinational companies, typically US and non-US would be shown separately.
• 16:01
  SPEAKER_01: Although 715 does allow for combined disclosure of US and foreign if the foreign plan is not significant and uses substantively similar assumptions to what is being used in the US.
• 16:18
  SPEAKER_01: So it's possible, but generally what I see is that companies with foreign plans are breaking out between US and non-US.
• 16:25
  SPEAKER_03: All right, that's helpful.
• 16:26
  SPEAKER_03: And then one of the things we sometimes talk about standard setting, and I know that there was an ASU a few years ago in this area, 2018-14, uh, that would be required for this year for companies, calendar year and companies that haven't already adopted it.
• 16:42
  SPEAKER_03: So, Jay, what should listeners be thinking about if they haven't adopted that standard yet?
• 16:46
  SPEAKER_03: What's new this year?
• 16:48
  SPEAKER_02: Right, right.
• 16:49
  SPEAKER_02: Yeah, that new guidance uh tweaked a few things, adding in some things and eliminating out a few of the required disclosures.
• 16:58
  SPEAKER_02: Uh, not a big, big change, but a few things in, a few things out, a few things changed.
• 17:03
  SPEAKER_02: One key thing that it added is a requirement to disclose the interest crediting rate for cash balance plans, which is a particular type of defined benefit plan, uh, or other plans that might have some type of promised or guaranteed interest crediting rate, since that's often used to calculate what the benefit obligation is.
• 17:27
  SPEAKER_02: So that's now a required disclosure.
• 17:30
  SPEAKER_02: Uh, and companies also now need to provide an explanation of the reason, so some type of qualitative discussion about significant gains and losses in the benefit obligation for each period, whether that's due to actuarial changes or discount rate changes or uh things like that.
• 17:48
  SPEAKER_02: What is it that qualitatively caused the obligation to change differently than you sort of expected based upon just sort of normal day-to-day activity?
• 17:57
  SPEAKER_03: All right, that's helpful.
• 17:58
  SPEAKER_03: And then we've really focused here on the liability disclosures, but obviously with pensions, assets can be a big thing.
• 18:06
  SPEAKER_03: Hopefully, for many plans, is a big thing.
• 18:09
  SPEAKER_03: Uh so uh how what should we be thinking about when it comes to disclosure of plan assets?
• 18:14
  SPEAKER_02: That there's a lot of them.
• 18:16
  SPEAKER_02: Um unfortunately, we know as you as Kenneth said, the the tables of rolling forward the assets and liabilities are often long.
• 18:24
  SPEAKER_02: Well, I usually find that the disclosures about plant assets and all that goes into it are often the longest part of the pension footnote, given their size and often their sensitivity to market movements and judgments about all the unobservable inputs that might be used to come up with those fair value.
• 18:42
  SPEAKER_02: So the disclosure requirements here say that you should provide users of the financials with an understanding of a couple of key things.
• 18:50
  SPEAKER_02: Uh, first, the investment policies or strategies or allocation decisions of the plan.
• 18:57
  SPEAKER_02: So maybe think about things like a narrative description of the investment policy and strategy that the company uses, the target allocation percentages for different asset categories, the investment goals and risk management practices and diversification requirements, things like that that the plan uses.
• 19:17
  SPEAKER_02: You also would perhaps consider if there's any intended relationship between the assets that the trust invests in and its benefit obligations.
• 19:27
  SPEAKER_02: Some companies will try to hold bonds that have similar payment streams as the future benefit payments to try to match them up.
• 19:33
  SPEAKER_02: Well, that might be an important thing to let readers know about.
• 19:37
  SPEAKER_02: As well as if you have any significant investments in funds like hedge funds, you may have to consider disclosing what their investment strategies are again to help people understand that.
• 19:49
  SPEAKER_02: Then maybe the next key thing I'd I'd mention is needing to do a breakdown of the fair value of the plan assets by class, meaning things like cash, equity securities, debt securities, real estate, derivatives, things, things like that.
• 20:05
  SPEAKER_02: Now, some investments, of course, cross over between categories, and you don't have to bifurcate a single investment between categories, but you'd probably use some sort of predominance test to figure out where it best fits.
• 20:17
  SPEAKER_02: The third key area is the inputs and valuation approaches that are used to measure the fair value of plant assets.
• 20:25
  SPEAKER_02: And this is where you have to include the breakdown of fair value by the level of the assets using the fair value hierarchy, the level one, level two, level three, uh, and those measured using the NAV practical expedient.
• 20:42
  SPEAKER_02: You have to show the breakdown of that.
• 20:44
  SPEAKER_02: And then the last key area is the effect on the fair value measurements of using significant unobservable inputs and their impact on the changes in plan assets during the period.
• 20:57
  SPEAKER_02: So I know we do have a future podcast coming up on fair value disclosures.
• 21:01
  SPEAKER_02: So maybe I'll stop there and not get into all the gory details of the requirements, but you can find all of those in ASC 715.
• 21:10
  SPEAKER_01: You know, one of the things, Jay, that I as as I was listening to you describe all those uh required disclosures, and we've been talking about how long the pension uh footnote can often be.
• 21:20
  SPEAKER_01: And then you were mentioning the ASU 2018-14 that came out recently.
• 21:25
  SPEAKER_01: And I think part of what the FASB was looking at is they they had heard that the pension footnote it can be extremely long.
• 21:31
  SPEAKER_01: And so I think they were thinking about whether there are areas where they should be pulling or not requiring information to try to cut it down because they had gotten that feedback that it it can be so and ultimately after kind of doing their diligence and outreach, they heard that no, actually, all of this information is actually very uh very helpful to investors and analysts and others who are using the footnotes, and that's why we still have these very lengthy disclosures.
• 22:00
  SPEAKER_03: Well, and I I think the other thing I would add is this is definitely a place where controls can be so important.
• 22:07
  SPEAKER_03: So I you know, obviously applies anytime we're talking about disclosures, but I do think making sure companies have the right controls over all of these different things is something I know, you know, they have they have to keep an eye on.
• 22:20
  SPEAKER_03: All right.
• 22:21
  SPEAKER_03: So we've already run through a lot, but why don't we hit a few last things and um a couple final questions for you is, you know, Jay, I'll start with you.
• 22:30
  SPEAKER_03: What else is top of mind for you as you think about these pension disclosures?
• 22:35
  SPEAKER_02: Well, maybe I'll start with a number of other required disclosures we see, which uh includes the key assumptions that are used to calculate the pension balances.
• 22:45
  SPEAKER_02: We kind of alluded to them, but we haven't really mentioned them specifically in the disclosure requirements.
• 22:49
  SPEAKER_02: But you are required to disclose things like the discount rates used to discount back the value of the plans, the rate of salary increases that are built into those projections, the expected long-term rate of return on plant assets that that makes up that part of the income calculation, as well as for retiring medical plans, the assumed healthcare cost trend rate that's being used.
• 23:16
  SPEAKER_02: Now the assumptions that are used to determine the benefit obligation should be disclosed for each year that a balance sheet is presented.
• 23:25
  SPEAKER_02: And the assumptions that are used to determine the amounts of benefit cost for the year should be disclosed for each year that an income statement is presented.
• 23:34
  SPEAKER_02: So you do have a slight um slight phase shift between the two, because one of them tends to be an end-of-year calculation, and one of them is usually based on a beginning of the year calculation.
• 23:43
  SPEAKER_02: So you have a few different uh places or a few different sets of numbers that you have to calculate these weighted averages for.
• 23:49
  SPEAKER_01: Yeah, and then also, Jay, um there are uh disclosure requirements related to some of the cash flow implications for the plan.
• 23:58
  SPEAKER_01: And obviously, you know, for some companies, these pension obligations are huge, and we've got lots of cash payments being made to retirees, and so there are required disclosures around the amount of benefits to be paid to plan participants, uh, and separately uh expected contributions into the plan over the course of the next year.
• 24:21
  SPEAKER_02: And then there are other specific required disclosures for specific situations, but maybe that's about as far as we want to go today, Heather.
• 24:31
  SPEAKER_02: So, again, like all of these things, uh probably be good for listeners to take a look at all the guidance in ASC 715 as you're in the disclosure and checklist uh as you're putting together your disclosures to make sure you capture them all kind of based on your particular facts and circumstances.
• 24:46
  SPEAKER_03: All right.
• 24:46
  SPEAKER_03: So, Jay, I think that's good.
• 24:48
  SPEAKER_03: Definitely plenty of information.
• 24:50
  SPEAKER_03: Uh, we don't need to cover more today.
• 24:52
  SPEAKER_03: But Ken, maybe I'll turn to you.
• 24:54
  SPEAKER_03: If someone does want more and especially wants to look at the detail, where should they go look?
• 24:59
  SPEAKER_01: Yeah, so I think a good starting point for all of the presentation and disclosure stuff that we've been talking about for pension and OPEB, you can go to chapter 13 in our financial statement presentation guide.
• 25:13
  SPEAKER_01: Uh, and then for more generally on accounting for pension and OPEB, we also have a pension guide that's available.
• 25:20
  SPEAKER_01: Uh, and then as Jay mentioned earlier in our podcast, today we do have a previous podcast on uh on pension and OPEB accounting.
• 25:29
  SPEAKER_03: Okay.
• 25:29
  SPEAKER_03: Then another question for both of you, and this taking a step back from all the detail, I know you've worked with a lot of companies on these disclosures.
• 25:39
  SPEAKER_03: And so, what's a piece of advice you would give if if you're the person who's responsible for putting all these disclosures together?
• 25:46
  SPEAKER_03: So, Jay, I'll go to you first with that.
• 25:48
  SPEAKER_02: Well, I'd probably say get started early, since there's so many items to include.
• 25:56
  SPEAKER_02: And you know, as best you can, try to build some of these things that you'll need for disclosure into sort of the core systems or tools that you use to do the accounting for these items, whether it's pension uh or OPEB, you know, the more you can kind of be building the information as you go and have it more readily available, therefore, when you're when it comes time to pull together all the footnote disclosures, I think that makes it makes it a fair bit easier.
• 26:27
  SPEAKER_03: All right, and Ken.
• 26:28
  SPEAKER_01: Yeah, and maybe just layer on to that in in terms of starting early, but also working, and and Heather, you had alluded to this earlier, working kind of hand in hand with uh with your outside actuary, because almost every company that's got one of the pension or OPEB plans is going to be uh using a third-party actuary to assist.
• 26:46
  SPEAKER_01: And the third party actuary helps a lot in organizing all of the information that's necessary in the footnote disclosures, and so making sure you're coordinating and working with them as early in the process as possible.
• 26:59
  SPEAKER_03: All right.
• 26:59
  SPEAKER_03: And then here's my final question.
• 27:01
  SPEAKER_03: So, what was the first standard that covered pension accounting?
• 27:07
  SPEAKER_02: Well, the one that is actually still in use now is FA, as you said, FAS87, which came out in the 1980s.
• 27:15
  SPEAKER_02: I actually do uh remember dealing with its uh very initial implementation way back when, but I don't remember which one that replaced.
• 27:23
  SPEAKER_01: And Heather, I'm gonna say APB6.
• 27:29
  SPEAKER_03: Fact check.
• 27:30
  SPEAKER_03: Ken was so close.
• 27:32
  SPEAKER_03: APB eight, accounting for the cost of pension plans, was the first full standard on pensions issued in 1966.
• 27:40
  SPEAKER_03: However, it did replace Chapter 13A of ARB 43, which was issued back in 1953.
• 27:50
  SPEAKER_03: All right, well, gentlemen, as always, pleasure to talk to you.
• 27:53
  SPEAKER_03: Thanks so much for joining me today.
• 27:56
  SPEAKER_03: That does it for today.
• 27:57
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• 27:59
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• 28:10
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  SPEAKER_03: From Thought Leadership at PWC, I'm Heather Horn.
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