Employee benefit plan financial statement auditors will need to consider whether disclosures related to the COVID-19 pandemic, CARES Act, SECURE Act and other matters should be included in the plan's financial statements. Potential disclosures include a subsequent event in accordance with FASB ASC 855; risks and uncertainties in accordance with FASB ASC 275; and/or a going concern in accordance with FASB ASC 205-40. General reporting and disclosure considerations related to COVID-19 are discussed in the AICPA FAQs — Audit Matters and Auditor Reporting Issues Related to COVID-19, which provides nonauthoritative guidance as developed by the AICPA staff. Click here for the AICPA FAQs.
EBP financial statement footnote disclosures need to be tailored to each individual plan considering the type of plan; plan year end (for determining if an event is a type one or type two subsequent event as defined in FASB ASC 855, and is therefore a recognized or non-recognized subsequent event); for any plan changes or amendments that have been made for the CARES Act, SECURE Act or other changes to the plan, including a plan freeze or partial or full termination; circumstances at the plan sponsor (financial position, ability to fund the plan currently and in the future, etc.); potential market volatility; and other factors.
The SEC Form 11-K Employee Stock Plan Annual Report database for annual report filings of employee stock purchase, savings and similar plans is an excellent source of example financial statement presentation and footnote disclosures for EBPs. Utilize the "Search Full-Text of Form 11-K" search page and enter "COVID", "SECURE Act" or other text into the "Search for Text" field. This will result in a listing of SEC Form 11-K plan filings with related disclosures.
Click here for the SEC Form 11-K Employee Stock Plan Annual Report database.
Below are a few examples of recent COVID-19, CARES Act and SECURE Act disclosures that were found using the SEC Form 11-K Employee Stock Plan Annual Report annual report database:
First Mid Bancshares Inc. 401(k) Profit Sharing Plan
Note 11: Subsequent Event
As a result of the spread of COVID-19 coronavirus, economic uncertainties have arisen which have resulted in significant volatility in the investment markets, resulting in a substantial decline in the value of the investments. The duration of these uncertainties and the ultimate financial effects cannot be reasonably estimated at this time.
Investment and Stock Ownership Plan of Avista Corporation
In March 2020, the World Health Organization categorized Coronavirus Disease 2019 ("COVID-19") as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The COVID-19 pandemic has led to volatility in financial markets and has affected, and may continue to affect, the market price of Avista common stock and other Plan assets. The potential economic impact brought by, and the duration of, COVID-19 is difficult to assess or predict and will depend on future developments that are highly uncertain and cannot be predicted.
The Plan has implemented certain requirements by the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and the Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act), which laws change the Plan to, among others, allow certain eligible individuals to receive coronavirus-related relief for loan repayment, suspend required minimum distributions, and delay the commencement date for required minimum distributions. The optional features within these acts are currently being assessed but have not been implemented to date. Written amendments to the Plan to reflect these operational changes will be adopted at a later date in accordance with applicable law and IRS guidance. No other subsequent events were identified through May 29, 2020, the date these financial statements were issued.
Aerojet Rocketdyne Retirement Savings Plan
On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic and resulting global disruptions have caused significant economic uncertainty and volatility in financial markets. As a result, the Plan's various investment securities have incurred significant declines in fair value since December 31, 2019. The impact of COVID-19 continues to evolve rapidly and the Company is not able at this time to estimate its full impact on the Plan's financial statements.
Effective April 5, 2020, the Plan adopted the distribution provision of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act that was signed into law on March 27, 2020. A CARES Act distribution allows the Plan's participants to take a COVID-19 related distribution up to $100,000 from the Plan beginning on or after January 1, 2020 and before December 31, 2020. In addition, effective April 21, 2020, the Plan adopted the temporary loan repayment deferral provision of the CARES Act. The deferral provision adopted by the Plan allows qualified Plan participants who have Plan loan repayments to defer such repayments until December 31, 2020.
SpartanNash Savings Plus Plan
Risks and Economic Uncertainties
The Plan invests in common stock of the Plan Sponsor, a stable value common collective trust, common collective trusts, common stocks, and mutual funds with underlying assets consisting of any combination of stocks, bonds, fixed income securities and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the fair values of investment securities will occur in the near term and that such changes could materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits.
On March 11, 2020, the World Health Organization characterized coronavirus (COVID-19) as a pandemic, and on March 13, the President of the United States declared a national emergency relating to the disease. In addition to the President's declaration, state and local authorities have recommended social distancing and have imposed quarantine and isolation measures on large portions of the population, including mandatory business closures. These measures are designed to protect the overall public health, however are expected to have material adverse impacts on domestic and foreign economies and may result in the United States entering a period of recession.
As a result of COVID-19, there has been heightened market risk and volatility associated with the pandemic, and this could materially affect participants' account balances and the amounts reported in the statements of net assets available for benefits and the statements of changes in net assets available for benefits, as mentioned above. Because of the uncertainty of the markets during this time, Plan management is unable to estimate the total impact the pandemic will have.
Additionally, the SEC EDGAR filing database allows users to search the full text of SEC filings from the last four years. This is an excellent source of example financial statement presentation and footnote disclosures for EBPs and other filing entities. Click here for SEC EDGAR filing database (be sure to use the Advance Search Page).
The DOL EBSA's expanded Form 5500 search tool can also be used to search for filings using new filters including: plan type, plan asset value, number of participants, employer plan types, business codes, form years, and locations (note that this system does not have text search). Click here for the EBSA Form 5500 Search.