Executives at Eli Lilly & Co. and Abbott Laboratories criticized FASBs proposal to require more detailed disclosure of the investment allocation and valuation of pension assets, calling it excessive and costly, according to separate comment letters to the Financial Accounting Standards Board, Norwalk, Conn.
We have nearly 20 benefit plans worldwide that have literally thousands of investments in various private and public companies through over 100 investment managers, wrote Arnold C. Hanish, executive director-finance and chief accounting officer at Eli Lilly. He expressed concern about the complexity of accumulating the asset data in a short period of time. The asset disclosure is not decision-useful data and the overall potential benefits to the readers do not outweigh the potential costs and time of providing this disclosure. Eli Lilly, Indianapolis, had $7.3 billion in defined benefit assets for its plans worldwide as of last Dec. 31, according to its 10-K report.
Greg W. Linder, vice president and controller at Abbott, wrote, Accumulating, summarizing and auditing this information will take more time than for any other current disclosure requirement and will be difficult to do. He noted the Abbott Park, Ill.-based company has $6 billion in pension assets worldwide.
Credit Suisses Rudolf Bless, managing director and chief accounting officer, and Patrick Joerin, vice president-compensation and benefits accounting, wrote a joint comment letter asking FASB to add a requirement for detailed disclosure of corporate pension plan liabilities and their risks to go along with its pension asset allocation proposal.
While they support the proposed rule, limiting disclosures only to plan assets does not provide the reader of the financial statements with a complete understanding of the risks of the plan, wrote Messrs. Bless and Joerin.
The public comment period on the proposal ends today. The proposal would amend Statement 132(R) Employers Disclosures about Pensions and Other Postretirement Benefits and would take effect for corporate fiscal years ending after Dec. 15, 2008.