SEC Won't Require Restatements for FASB 158 Misclassifications

July 13, 2007 ( - The Securities and Exchange Commission (SEC) says it will not require amended filings to correct misclassifications under new Financial Accounting Standards Board (FASB) Statement 158 for defined benefit pension plans, according to a recent alert from the AICPA's Center for Audit Quality.

WebCPA reports that some companies did not properly implement FASB’s guidance on what to do with the transition adjustment as required by the new standard. The SEC told the Center for Audit Quality it will not require amended filings if the misapplication does not produce a material misstatement and the components of comprehensive income and the transition adjustment are disclosed on the financial statement in such a way that the amounts can be determined.

SFAS 158 requires employers to report pension plan funding surpluses or deficits in the balance sheet instead of just as a footnote, while making an adjustment in the ending balance of accumulated other comprehensive income (See Running the Fund: Out of Balance ).

The SEC warned that its decision to not require amended statements is not meant to set a precedent for other types of misapplications that could have an impact on either comprehensive income or accumulated other comprehensive income, according to WebCPA.