# ASC 715 pension and OPEB accounting valuations

Canonical: https://finbryn.com/us/services/actuarial-services/asc-715-pension-opeb-valuations

ASC 715 valuation support covers a discount rate memo, PBO and ABO roll-forward, net periodic benefit cost, AOCI amortization and disclosure tables. A private company follows ASC 715 when it issues US GAAP financial statements, which a lender, surety, investor or auditor often requires. Finbryn prepares the workpapers for review and signature by a credentialed signing actuary.

Any company that reports under US GAAP and sponsors a defined benefit pension plan, a retiree medical plan or retiree life insurance needs an ASC 715 valuation every reporting year. The numbers land in three places: the funded status on the balance sheet, net periodic benefit cost in the income statement, and the notes. Most private employers meet the requirement through an audit request, a lender package or a sale process rather than by choice.

Finbryn prepares the working layer of that valuation. We reconcile the census file to payroll and retiree records, write the discount rate memo, run the roll-forward from the prior-year obligation to the new one, split net periodic benefit cost into its components and draft the disclosure tables in your statement format. [Hesham Khan](/about) is Finbryn's signing actuary: he reviews the assumptions and results and signs the valuation report. The workpapers Finbryn prepares are not a certification or an opinion, and we never describe the output as compliant with ASC 715. Your auditor decides whether the evidence is enough.

Timing follows the measurement date. Plan assets and obligations are measured at the fiscal year-end ([FASB Statement 158](https://storage.fasb.org/fas158.pdf), a pre-Codification standard; the Codification became the authoritative text for periods ending after September 15, 2009 under [Statement 168](https://storage.fasb.org/fas168.pdf), and we cite the Statements because the Codification is behind a login), and an employer whose year-end is not a month-end may use the nearest month-end if it applies that choice consistently ([FASB ASU 2015-04](https://storage.fasb.org/ASU%202015-04.pdf), read in full on 2026-10-02).

Two rule changes shape what you see in the output. [ASU 2017-07](https://storage.fasb.org/ASU%202017-07.pdf) requires the service cost component to sit with other compensation cost and the remaining components to sit outside any operating subtotal. [ASU 2018-14](https://storage.fasb.org/ASU%202018-14.pdf) changed the disclosure list, adding the interest crediting rates for cash balance plans and an explanation of significant gains and losses in the obligation. Retiree medical claims and premium data reach us de-identified, and we do not take protected health information. The sections below show the component table, a roll-forward with illustrative numbers, and what the auditor tests.

What you get: Discount rate support and assumption memo; Projected and accumulated benefit obligation calculations; Net periodic benefit cost and OCI amounts for the year; Disclosure tables in the format your financial statements use; An auditor request list answered in one file

Software we work in: Microsoft Excel, Python

How filing works: We prepare the return and the working papers. A credentialed signer or licensed partner signs and files it, or you file it yourself.

## Who needs an ASC 715 valuation?

Employers that report under US GAAP and sponsor a defined benefit pension plan, a retiree medical plan or another benefit accounted for under Topic 715 need a valuation every reporting year. [ASU 2017-07](https://storage.fasb.org/ASU%202017-07.pdf) states that it applies to all employers, including not-for-profit entities, that offer those plans.

That covers audited private companies, public registrants, not-for-profits and private-equity portfolio companies that inherited a legacy plan. A 401(k) or other defined contribution plan sits outside this work.

Typical triggers:

- An audit request list that asks for the PBO, plan assets and net periodic benefit cost
- An acquisition that brings in a frozen or closed plan
- A plan amendment, freeze or settlement that changes the cost mid-year
- A lender or buyer asking for the funded status and expected contributions

## How is the discount rate set and when is the plan measured?

The discount rate reflects high-quality fixed-income debt matched to the plan's expected benefit payments, and the plan is measured at the fiscal year-end or, under ASU 2015-04, the nearest month-end. Pre-Codification Statement 87 ([paragraph 44A](https://storage.fasb.org/aop_fas87.pdf), pensions) and Statement 106 ([paragraph 31A](https://storage.fasb.org/aop_fas106.pdf), retiree benefits) say the objective is to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments, would provide the necessary future cash flows to pay the benefits when due. The Codification text is behind a login, so the signing actuary confirms the current ASC 715 wording.

Our discount rate memo records the curve or bond portfolio used, the plan's expected payment timing, the rate selected last year and the reason for any movement, so the signing actuary can select the rate and the auditor can retrace it.

On timing, [FASB Statement 158](https://storage.fasb.org/fas158.pdf) required an employer to measure plan assets and obligations as of the date of its fiscal year-end statement of financial position, with limited exceptions. When the year-end is not a month-end, [ASU 2015-04](https://storage.fasb.org/ASU%202015-04.pdf) allows the month-end closest to it, applied consistently, with an adjustment for contributions or significant events in between.

## What is the difference between the PBO and the ABO?

The PBO is the obligation that sits in a pension plan's funded status, and the ABO counts the same service at current and past pay with no assumption about future pay, so for a pay-related formula the PBO is the larger number. The table sets them side by side; the definitions are paraphrased from FASB documents because the Codification glossary is behind a login.

| Measure | What it counts | Where it is used | Source |
| --- | --- | --- | --- |
| Projected benefit obligation (PBO) | For a pension plan, the benefit obligation recognized in the funded status; reflects future compensation levels where the formula depends on pay | Funded status on the balance sheet; disclosure of plans with a PBO above assets | [FASB Statement 158](https://storage.fasb.org/fas158.pdf), [FASB Statement 87](https://storage.fasb.org/aop_fas87.pdf), [ASU 2018-14](https://storage.fasb.org/ASU%202018-14.pdf) |
| Accumulated benefit obligation (ABO) | Benefits the pension formula attributes to service before a date, based on current and past pay (Statement 87, paragraph 18) | Disclosure for plans whose ABO exceeds plan assets | [FASB Statement 87](https://storage.fasb.org/aop_fas87.pdf), [ASU 2018-14](https://storage.fasb.org/ASU%202018-14.pdf) |
| Accumulated postretirement benefit obligation (APBO) | The benefit obligation for retiree medical and other non-pension plans | Funded status for those plans | [FASB Statement 158](https://storage.fasb.org/fas158.pdf) |

[ASU 2018-14](https://storage.fasb.org/ASU%202018-14.pdf) clarified the disclosure in paragraph 715-20-50-3: the PBO and plan asset fair value for plans with a PBO above assets, and the ABO and plan asset fair value for plans with an ABO above assets. Both measures come out of the same census and assumption set, so we run them in one model.

## What are the components of net periodic benefit cost and where does each land?

Net periodic benefit cost has up to seven components, and after ASU 2017-07 only the service cost lands inside operating results. [ASU 2017-07](https://storage.fasb.org/ASU%202017-07.pdf) lists the components in paragraph 715-20-50-1(h) and sets the presentation in paragraph 715-20-45-3A. The last column uses the illustrative plan described in the roll-forward section.

| Component | What it measures | Where it lands | Illustrative amount ($000) |
| --- | --- | --- | --- |
| Service cost | Benefits earned by employees during the year | Same line as other compensation cost for those employees; the only component eligible for capitalization | 300 |
| Interest cost | Interest on the benefit obligation for the year | Separate line outside any operating subtotal | 250 |
| Expected return on plan assets | Expected long-term return applied to plan assets | Same as interest cost, shown as a credit | (266) |
| Gain or loss component | Amortization of net gains and losses held in AOCI | Same as interest cost | 40 |
| Prior service cost or credit component | Amortization of plan amendment cost held in AOCI | Same as interest cost | 20 |
| Net periodic benefit cost | Sum of the five components above | Service cost in operating results, remainder outside | 344 |

The standard also lists a transition asset or obligation component, which is zero in our example. Gains or losses from settlements or curtailments, and the cost of certain termination benefits, are reported in the same place as the non-service components. Illustrative figures only: 300 + 250 - 266 + 40 + 20 = 344.

## How does the obligation roll forward from one year to the next?

The year-end PBO equals the prior-year PBO plus service cost, interest cost and any actuarial loss, less benefits paid. The diagram shows that chain from left to right, ending at the signing actuary's review, and the figures are made up so that every line can be checked. Funded status is plan assets at fair value less the benefit obligation ([FASB Statement 158](https://storage.fasb.org/fas158.pdf)).

**Illustrative** pension plan, $000:

| PBO roll-forward | Amount | Plan asset roll-forward | Amount |
| --- | --- | --- | --- |
| Prior-year PBO | 5,000 | Prior-year plan assets | 3,800 |
| Service cost | 300 | Actual return on assets | 380 |
| Interest cost (5.0% of 5,000) | 250 | Employer contributions | 400 |
| Benefits paid | (260) | Benefits paid | (260) |
| Actuarial loss (lower discount rate) | 190 | | |
| Year-end PBO | 5,480 | Year-end plan assets | 4,320 |

Check: 5,000 + 300 + 250 - 260 + 190 = 5,480, and 3,800 + 380 + 400 - 260 = 4,320. Funded status moves from (1,200) at the start of the year to (1,160) at the end, a 40 improvement. In practice the actuary also applies the plan's benefit formula, mortality and timing of payments, which this simplified example ignores.

Diagram: Roll-forward of the benefit obligation over one year. Six steps from the prior-year PBO of 5,000 to a year-end PBO of 5,480, using made-up numbers, ending at the signing actuary's review. (Illustrative.)

## How do OCI amortization and the disclosure package work?

Gains, losses and prior service cost that are not yet in net periodic benefit cost sit in accumulated other comprehensive income (AOCI), and a schedule releases them into cost over time. [FASB Statement 158](https://storage.fasb.org/fas158.pdf) required those amounts to be recognized in other comprehensive income as they arise and adjusted as they are later recognized in cost. For retiree benefits, [Statement 106 paragraph 59](https://storage.fasb.org/aop_fas106.pdf) set the corridor: amortization is required when the net gain or loss at the start of the year exceeds 10 percent of the greater of the obligation or the market-related value of plan assets, and the minimum amortization is that excess divided by the average remaining service period of active participants. Paragraph 60 allows any systematic method that amortizes at least that much.

Continuing the **illustrative** plan: the liability loss of 190 less the asset gain of 114 (actual return 380 against 266 expected) leaves a net loss of 76 added to AOCI. Releasing 40 of net loss and 20 of prior service cost reduces AOCI by 60, so the net OCI charge for the year is 16.

Reconciliation: employer contribution 400, less net periodic benefit cost 344, less the OCI charge 16, gives the 40 improvement in funded status. That tie-out is the one auditors ask to see first.

The disclosure file is built from the same figures. [ASU 2018-14](https://storage.fasb.org/ASU%202018-14.pdf) removed some disclosures and added others, and it took effect for fiscal years ending after December 15, 2020 for public business entities and after December 15, 2021 for all other entities.

## What does the auditor test in an ASC 715 valuation?

The auditor evaluates the actuary's competence, capabilities and objectivity, understands their work and judges whether it is appropriate audit evidence. That is the requirement in [AU-C 501, paragraph .27](https://downloads.ctfassets.net/rb9cdnjh59cm/6SZYDorUSdWM3sjctjPnOL/27be333e0476fba3717242ca5a5ecc7b/ps-au-c-sections.pdf) for a management's specialist, and application paragraph .A70 adds that failing to use needed expertise, such as actuarial calculations, may be a significant deficiency or material weakness.

If the audit firm engages its own actuary instead, AU-C 620 applies: the auditor evaluates that specialist's competence and objectivity (paragraph .09), understands the field of expertise (.10) and agrees the work in writing where appropriate (.11), and keeps sole responsibility for the opinion (.03).

We organize the file for those tests:

- Census tie-out to payroll and retiree records, with an exceptions list
- The discount rate memo and the support for each assumption
- The PBO, asset and cost roll-forwards with the reconciliation to funded status
- Disclosure tables tied to the general ledger and the journal entries
- A one-page answer sheet for the auditor's standard pension request list

Finbryn does not describe the work as audit-ready. When Finbryn's signing actuary signs the valuation report, the auditor evaluates him as management's specialist under AU-C 501 paragraph .27 and decides whether the evidence is enough.

## The process

1. **Scope the plans and fix the measurement date**: List each pension and retiree plan, the plan year, the fiscal year-end and whether the nearest month-end expedient applies.

2. **Reconcile census and asset data**: Tie participant, pay and retiree records to payroll and the trustee statement, and log every exception for your plan administrator.

3. **Write the discount rate and assumption memo**: Document the rate source, payment timing, mortality and pay assumptions, and the change from last year, for the signing actuary to select.

4. **Run the roll-forward and cost components**: Roll the PBO, ABO and plan assets forward and split net periodic benefit cost into service cost and the other components.

5. **Draft disclosures and journal entries**: Build the note tables, the AOCI schedule and the entries that tie the result to your general ledger.

6. **Signing actuary review and signature**: Finbryn's signing actuary reviews the assumptions and results and signs the valuation report.

7. **Auditor review**: Your auditor tests the specialist's work under AU-C 501 and receives one file that answers the standard request list.

## Common problems we fix

| The problem | How we fix it |
| --- | --- |
| Census file does not agree to payroll or the retiree list | We reconcile record by record before any calculation and hand your plan administrator a short exceptions list to clear. |
| The discount rate has no written support | The assumption memo records the source, the payment timing and the change from last year, so the auditor can retrace the selection. |
| Pension cost still sits in one operating line | We split the components and map service cost to compensation lines and the rest outside operating results, the way ASU 2017-07 requires. |
| The roll-forward does not tie to the change in funded status | We reconcile contributions, cost and OCI to the funded status movement before the disclosure tables are drafted. |
| Disclosure tables do not match last year's format | We start from your prior-year note and carry the structure forward, adding the interest crediting and gain and loss explanations ASU 2018-14 asks for. |

## By the numbers

| Figure | What it means | Source |
| --- | --- | --- |
| Dec 15, 2017 | ASU 2017-07 applies to public business entities for annual periods beginning after this date (other entities: after December 15, 2018) | [storage.fasb.org/ASU%202017-07.pdf](https://storage.fasb.org/ASU%202017-07.pdf) (2026-10-02) |
| Dec 15, 2020 | ASU 2018-14 effective for fiscal years ending after this date for public business entities, after December 15, 2021 for all others | [storage.fasb.org/ASU%202018-14.pdf](https://storage.fasb.org/ASU%202018-14.pdf) (2026-10-02) |
| Nearest month-end | Measurement-date expedient for an employer whose fiscal year-end is not a month-end, per ASU 2015-04 | [storage.fasb.org/ASU%202015-04.pdf](https://storage.fasb.org/ASU%202015-04.pdf) (2026-10-02) |

## Glossary

- **Projected benefit obligation (PBO)**: The pension benefit obligation recognized in the funded status, reflecting future compensation levels where the plan formula uses pay.

- **Accumulated benefit obligation (ABO)**: The present value of pension benefits attributed to service to date, based on current and past pay with no assumption about future pay.

- **Net periodic benefit cost**: The year's expense for a defined benefit plan: service cost, interest cost, expected return on assets and amortization of amounts held in AOCI.

- **Accumulated other comprehensive income (AOCI)**: The equity account that holds gains, losses and prior service cost until they are released into net periodic benefit cost.

- **Corridor**: The band, 10 percent of the greater of the obligation or the market-related value of assets in Statement 106, outside which accumulated net gains and losses must be amortized.

- **Prior service cost**: The cost or credit from a plan amendment that changes benefits for service already rendered.

- **Measurement date**: The date at which plan assets and obligations are valued, normally the employer's fiscal year-end.

- **Management's specialist**: An individual or firm with expertise outside accounting, such as an actuary, whose work the company uses to prepare its financial statements.

## Frequently asked questions: ASC 715 pension and OPEB accounting valuations

**Q: Do I need an actuary to produce ASC 715 numbers?**

A: The Codification text is behind a login, and we found no credential rule in the FASB statements and updates we read. In practice the auditor evaluates the specialist's competence, capabilities and objectivity under AU-C 501 paragraph .27 (AICPA standards, checked 2026-10-02), so most employers use a credentialed actuary. Finbryn prepares the workpapers, and Finbryn's signing actuary reviews and signs the valuation report.

**Q: What measurement date does ASC 715 use?**

A: Plan assets and obligations are measured at the employer's fiscal year-end, with limited exceptions (FASB Statement 158). If the year-end is not a month-end, ASU 2015-04 (April 2015) allows the closest month-end when applied consistently.

**Q: Where does pension cost go on the income statement after ASU 2017-07?**

A: Service cost goes in the same line as other compensation cost for those employees. Interest cost, expected return and the amortization components go outside any operating subtotal, in one or more separate lines. The rule took effect for public business entities for annual periods beginning after December 15, 2017.

**Q: What disclosures changed with ASU 2018-14?**

A: The update removed items such as the amounts in AOCI expected to be recognized next year and added the weighted-average interest crediting rates for cash balance plans and an explanation of significant gains and losses in the obligation. It applies to fiscal years ending after December 15, 2020 for public business entities (FASB, checked 2026-10-02).

**Q: What does an ASC 715 valuation cost?**

A: Fees depend on the number of plans, the participant count, the quality of the census file, whether the year is a full valuation or a roll-forward, the complexity of the benefit design and how tight the audit deadline is. We found no public fee schedule for corporate pension valuations that we could open on 2026-10-02, so we publish no range. Finbryn quotes in writing after seeing a sample of your data, and the quote names who signs.

**Q: How do I choose a provider for ASC 715 valuation work?**

A: Ask who signs the report and which credential they hold, how they document the discount rate, whether they have worked with your auditor's review process, and what they need from you in the census file. Ask for a sample disclosure table and a reconciliation to funded status. A good answer names the standard (ASC 715) and the date of the assumptions used.

**Q: What data does the valuation need from us?**

A: A census file with birth dates, hire dates, pay and benefit details for active and inactive participants, the plan document and amendments, the trustee statement of assets and the benefits paid in the year. For retiree medical plans we use premium and de-identified claims data and never protected health information.

**Q: Can the same work support an IAS 19 report for a foreign parent?**

A: Yes, the census and plan data are shared, but the calculations are separate because IAS 19 uses net interest and recognizes remeasurements in OCI without reclassifying them (IFRS Foundation, IAS 19 paragraphs 122 and 123, checked 2026-10-02). See our [IAS 19 page](/services/actuarial-services/ias-19-employee-benefit-valuations) for the side-by-side table.

**Q: Does a private company have to follow ASC 715?**

A: Yes, if it issues US GAAP financial statements. It then records the funded status on the balance sheet and reports net periodic benefit cost, usually from an actuary's valuation. A company that prepares statements on another basis, such as the tax basis, does not apply ASC 715, but most lenders, sureties and investors ask for GAAP statements. Your auditor decides what applies to you.

**Q: My auditor asked for an actuarial report. What do I send?**

A: The signed valuation report, the census and asset data behind it, your assumptions memo, the plan document, benefit payment records and trustee statements. The auditor tests the actuary's work and ties the data to your records, and may use their own specialist under AU-C 620; the SAS 146 amendments apply to periods beginning on or after December 15, 2025 (AICPA, checked 2026-10-16).

Related services:
- [IAS 19 employee benefit valuations for US subsidiaries](https://finbryn.com/us/services/actuarial-services/ias-19-employee-benefit-valuations)
- [GASB 75 OPEB and GASB 101 compensated absences valuations](https://finbryn.com/us/services/actuarial-services/gasb-75-opeb-gasb-101-valuations)
- [White-label actuarial support for accounting firms and TPAs](https://finbryn.com/us/services/actuarial-services/white-label-actuarial-support)
- [Actuarial review support for audit teams](https://finbryn.com/us/services/actuarial-services/auditor-specialist-actuarial-review-for-firms)
- [Pension asset-liability and cash flow studies](https://finbryn.com/us/services/actuarial-services/pension-asset-liability-cash-flow-studies)

Related guides:
- [IAS 19 vs ASC 715: Employee Benefit Accounting](https://finbryn.com/us/guides/ias-19-vs-asc-715-employee-benefits)

## Sources

1. [FASB, ASU 2017-07: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost](https://storage.fasb.org/ASU%202017-07.pdf) (2026-10-02)
2. [FASB, ASU 2018-14: Changes to the Disclosure Requirements for Defined Benefit Plans](https://storage.fasb.org/ASU%202018-14.pdf) (2026-10-02)
3. [FASB, ASU 2015-04: Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets](https://storage.fasb.org/ASU%202015-04.pdf) (2026-10-02)
4. [FASB, Statement No. 158: Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans](https://storage.fasb.org/fas158.pdf) (2026-10-02)
5. [FASB, Statement No. 87: Employers' Accounting for Pensions (pre-Codification)](https://storage.fasb.org/aop_fas87.pdf) (2026-10-02)
6. [FASB, Statement No. 168: The FASB Accounting Standards Codification (pre-Codification Statements superseded)](https://storage.fasb.org/fas168.pdf) (2026-10-02)
7. [FASB, Statement No. 106: Employers' Accounting for Postretirement Benefits Other Than Pensions](https://storage.fasb.org/aop_fas106.pdf) (2026-10-02)
8. [AICPA, U.S. Auditing Standards, AU-C sections 501 and 620](https://downloads.ctfassets.net/rb9cdnjh59cm/6SZYDorUSdWM3sjctjPnOL/27be333e0476fba3717242ca5a5ecc7b/ps-au-c-sections.pdf) (2026-10-02)

Reviewed October 2026

[All services in Actuarial services](https://finbryn.com/us/services/actuarial-services)

## Contact
- Phone: +1 (312) 313-7376
- Email: hello@finbryn.com
- Booking page: https://finbryn.com/us/book