QUESTION: I have run a valuation to get pension expense / postretirement benefit expense according to an accounting standard. How do I get the numbers I need for the end of year disclosure?

ANSWER: The following steps are designed to create the footnote disclosure of funded status by rolling forward accounting liabilities to the end of the year. The disclosure of pension cost / postretirement benefit cost should be taken from the Valuation Set used for the expense valuation, with “hand adjustment” for actual experience as appropriate for the specific accounting standard.

1. Copy the Asset & Funding Policy referenced by the expense run’s Valuation Set. Save As New with the following changes:

Note: With the exception of the asterisked (*) items, these are all steps that are required to create the year+1 Asset & Funding Policy whether or not end of year disclosure calculations are done.

1. Use the Update button to:

• Copy in any new amortization bases (e.g., plan changes) from the Valuation Set.

• Roll forward the amortization bases one year. Note that this will automatically update the accounting Prior Year Values topic.

2. Under the Initial Asset Values topic:

• Change the accounting Measurement Date to the beginning of the next year.

• Enter the end of year accounting asset value.

• Set the Section 420 transfer Fraction of the year when transfer will occur parameter value equal to 1 if not already done.*

3. Under the Accounting Methodology topic:

• Enter the end of year Net amount recognized or Prepaid (Accrued) Benefit Cost (the terminology varies by accounting standard).

4. Under the Contribution Policy topic, set the timing of contributions to the end of the year (Fraction of year from Valuation Date to actual date contributions are made parameter value equals 1), if not already done.*

5. Under the Benefits and Rounding topic, for the expected benefit payment override, set the Accounting roll forward parameter value equal to the value to be used to roll the liability to the end of year. (If this value is left blank, the liability will be rolled forward to the end of year using the expected benefit payments that ProVal calculates.)

6. Update the Prior Year Values topic for the following:

• Fiscal year contributions (Prior year employer contributions parameter).

• Fiscal year benefit payments (Benefits paid, or Benefits paid for Accounting, parameter).

2. Copy the Valuation Set and Save As New with the following changes;

1. Reference the new Asset & Funding Policy.

2. If the Valuation Set contained Additional Events (such as for a discount rate change or plan changes made at the beginning of the year, i.e., a change from the prior year), modify the Valuations Included in the Baseline Gain or Loss Event to reflect the final benefits and assumptions.

3. (Select and) Erase any Additional Events.

4. If all (end of year) actuarial assumptions for year-end disclosure, including the accounting discount rate and the mortality rates, have not changed from the final assumptions used for the Valuation Set of step 2.b. above, then you need not run additional Valuation(s). Otherwise, make the appropriate changes to the set(s) of Valuation Assumptions used for the beginning of year expense Valuation(s), run Valuation(s) using these revised assumptions and include the Valuation(s) in the Valuation Set, as baseline (not event) Valuation(s).

3. Run the Valuation Set and, under the Valuation Set Exhibits command of the Output menu, view the Accounting Reconciliation of Funded Status exhibit. This exhibit will include:

1. End of year VBO/ABO/PBO values (in OPEB mode, APBO values) based on a roll-forward of the beginning of year valuation.

2. End of year (beginning of next year) unamortized amount and prepaid (accrued) pension cost / postretirement benefit cost, if the accounting standard is not ASC 715.

3. End of year (beginning of next year) amount recognized in accumulated other comprehensive income (AOCI) and net amount recognized if the accounting standard is ASC 715.

4. Reconciliation of net amount recognized or prepaid (accrued) pension cost (terminology varies by accounting standard).

5. Roll-forward change in the PBO (in OPEB mode, APBO).

Note: For the actual disclosure, “hand adjustments” to this schedule are required for:

• The prior year disclosed PBO (in OPEB mode, APBO),

• Any plan amendments valued during the year,

• The balancing experience gain/loss and

• To change the dates from the beginning of the next year to the end of this year.