The statement of changes in net assets would report the principal changes by major category. Additions would include contributions and investment income, including the net change in the fair value of investments. Deductions would include benefits, refunds, and administrative expenses. Reporting investment at fair value would be a significant change for many plans, although an increasing number of plans have adopted fair value in recent years. The GASB believes reporting fair value is useful and consistent with the stewardship focus adopted for the financial statements.
Investment performance is an essential element of stewardship responsibility.
The GASB concluded that reporting changes in fair value is important for assessments of investment performance, which should include the results of holding as well as selling investments. The Board considered but decided not to accept amortized cost for fixed-income securities, even if a plan intends to hold them to maturity, because amortized cost does not provide information about the effects on Investment performance of the decision to hold. The GASB emphasizes, however, that fair value generally would not be appropriate for reporting a plan's funded status. From that perspective, a smoothed market value that reduces short-term volatility is preferred. The conclusion that different asset values are needed for different purposes contributed to the decision to require plans to report funded status in a multi-year schedule of funding progress and not in the financial statements.