NASBP recently has become a member of the Construction Industry FASB (Financial Accounting Standards Board) Coalition (CIFC), joining 10 construction industry organizations to influence FASB/International Accounting Standards Board (IASB) proposals that have serious repercussions for construction firms participating in multi-employer pension plans.

Mechanical Contractors Association of America (MCAA) General Counsel John McNerney said that, “If the CIFC’s proposal is accepted without material modification, the NASBP and other CIFC groups will have achieved a significant gain for the integrity of the financial capacity of the industry overall, the stability of our plans, and the benefits for the workers they cover. Moreover, NASBP and the CIFC groups will have marked a significant achievement in inter-association collaboration and problem-solving.”

In addition to NASBP, the 10 organizations that compose the CIFC include 1) MCAA, 2) Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), 3) National Electrical Contractors Association (NECA), 4) The Association of Union Constructors (TAUC), 5) International Council of Employers for Bricklayers and Allied Craftworkers (ICE-BAC), 6) Finishing Contractors Association (FCA), 7) Associated General Contractors of America (AGC), 8) Ironworker Management Progressive Action Cooperative Trust (IMPACT), 9) National Association of Construction Boilermaker Employers (NACBE), and 10) the North American Contractors Association (NACA). Certain banking institutions have indicated support for the direction of CIFC.

CEO Vincent Sandusky of SMACNA, noted in a letter to NASBP that, “The positive participation of a quality organization like NASBP will further FASB’s laudable goal of increased transparency that benefits users of financial statements, and our coalition’s objective of FASB doing so without unnecessary and severe negative consequences to reporting entities.”

In April 2010, FASB began issuing a detailed set of proposed financial audit disclosure and recognition rules in three related Exposure Drafts pertaining to international accounting rules, loss contingencies, and routine disclosures of multiemployer pension plan participation that presented the very real prospect of diminishing the financial capacity of the union–signatory sector of the construction industry, thereby compromising both sound accounting disclosures and national pension plan stability at the same time. The proposed rules were based on fundamental misconceptions about the basic structure and operation of construction plans set up in national law and policy. MCAA members, along with their counterparts in the other Campaign for Quality Construction (CQC) associations immediately decided to meet the seriousness of the challenge with an exceptional effort to directly engage FASB, rather than taking the routine and usual course of written confrontation in essentially passive written comments.

MCAA and the CQC groups set out to assemble a broad panel of experts in all disciplines relating to pension plan operations – actuaries, trustees, professional trustees, accountants, lawyers, contributing employers and association representatives, and most importantly – users of financial statements—commercial lenders and surety firms. The plan was to provide the most expert and in-depth analysis of the proposals from all perspectives, directed by those most directly involved in the issue, and then engage FASB in a constructive set of meetings to help arrive at achieving a workable set of disclosures that did not have all the unintended negative collateral consequences inherent in the original proposals. Over the course of the year, MCAA and CQC reached out to an even more broad group of industry groups, including AGC, NACBE, IMPACT, NACA, so that by the time of the second meeting with FASB, the CIFC was formed and represented all significant groups in the construction industry affected by the FASB proposals.

CIFC has offered alternative disclosure approaches that achieve FASB’s objectives without the negative consequences inherent in FASB Exposure Draft ED-715 as proposed in April 2010. NASBP become an active player in that effort through sending comment letters to FASB. Many of the NASBP points echoed similar points made by CQC at its private meeting with FASB representatives in Norwalk, CT at the initial meeting in October 2010, and then later with full membership and support of the effort and endorsement of a potential alternate disclosure footnote that the CIFC presented to FASB at a final follow-up meeting in March 2011. With NASBP key support and backing, along with Key Bank, Liberty Mutual Surety, Amalgamated Bank in Chicago, and perhaps other user groups, the CIFC is hopeful that FASB, ultimately, will accept the pared down disclosure footnote table that both achieves FASB’s greater transparency and reporting goals, while avoiding the problems that CIFC identified with respect to overbroad disclosures of withdrawal liability, retiree health benefits, and other aspects of plan disclosures that are inapt for construction plans.

The ad hoc coalition approach, relying on consolidated expertise across all industry groups will have proved to have been an able match for an extraordinary challenge.

The constructive engagement, and collaboration MCAA and the CIFC, achieved with FASB set a high mark for credible, good-faith, interest-based problem solving. The constructive relationship the CIFC built with FASB principals and staff has been exceptional. There may be more room there for taking on other issues in this way. Furthermore, with the scope of pension issues and other broad industry challenges mounting all the time, concentrated coalition problem solving could yet gain further achievements as pooling resources and expertise is proven to be effective to meet complex challenges.

In the fall of 2010, NASBP secured legal counsel to present an educational program to the membership describing the IASB and FASB proposed rules on the topic, which is available as an audio recording to members, affiliates and associates by clicking here.

Also, in 2010 NASBP researched the impact of these proposals on clients of NASBP’s membership and collaborated with industry groups, such as AGC and MCAA on the appropriate responses to the three IASB/FASB proposals and then articulated these in letters to IASB/FASB.

NASBP will keep the membership apprised of any developments that arise on this issue. In addition, NASBP continues to monitor the IASB/FASB revenue recognition proposal. Darrin Weber of IMA of Texas recently shared his perspective on the issue and of a meeting he attended this past fall on behalf of NASBP. To read his perspective about the issue and NASBP efforts, visit the NASBP site on the issue by clicking here.