The Financial Accounting Standards Board (FASB) is the professional body that determines accounting standards for both professional practice and legal compliance. They are poised to unwittingly harm union construction.
Update
The comment period for the proposed update now extends through November 1, 2010.
Review the Comment Letters submitted to FASB thus far on Disclosure about an Employer's Participation in a Multiemployer Plan.
The FASB is proposing that union contractors be required to include their multi-employer pension liability as a part of their financial statements and disclosures. The FASB is considering requiring the following:
- A description of exposure to financial risks to the contractor arising from participation in the plan.
- A description of funding improvement plans, warning status and possible remedies.
- The amount that is required to be paid on withdrawal from the plan as of the most recent date (even if it is only triggered upon withdrawal from the plan)
Fifteen disclosures on contributions, condition of the trust funds, percentage of employees and contributions represented are also proposed.
This is a serious problem for almost every union contractor in the U.S. The impact on banking and bonding for every union contractor could be a major issue if they are required to include their multi-employer pension liability in their financial reports and statements. The impact to unions attempting to market to open shop contractors will be severe, if these reported liabilities are part of the package they assume when signing a new union agreement.
The FASB clearly does not understand the collateral impact of their proposed rule-making, that much is clear. They are publishing these proposed guidelines at the end of August for comment and the industry had best be prepared to engage the FASB with our concerns.
What Can You Do?
If you are a contractor
- Contact your local or national association and inform them of these pending regulations so they can secure financial resources to interpret and respond to the proposal.
- Contact your CPA and bonding agent as they will have insights on the specific impact this may have on your banking, bonding and business.
If you are a labor organization
- Contact your International Union. Let them know that this is a very serious issue to the future of union construction. Top leadership needs to be engaged in making sure that any final guidelines do not cripple union contractors or labor organization's ability to attract them.
Linked below for reference is documentation on this proposed rule change