The Financial Accounting Standards Board has finalized its accounting standards update meant to simplify accounting for employee benefit plans.

In ASU 2015-12, FASB provides a three-part fix to the accounting for employee benefit plans focused on defined benefit and defined contribution plans and to health and welfare benefit plans. The first part allows entities to measure the value of fully benefit-responsive investment contracts at the contract value rather than fair value as previously required in accounting rules.

FASB says its outreach revealed users of plan financial statements find no value in having the fair value presentation over the contract value. Even guidance from the American Institute of Certified Public Accountants asserts that contract value is the relevant measure for such contracts because it is the measure required for regulatory reporting and for determining transactions, such as withdrawals.

In a second part, FASB eliminates disclosure requirements for individual investments that represent 5 percent or more of net assets available for benefits and the net appreciation or depreciation for investments by general type. Those disclosures are dropped for both participant-directed investments and non-participant directed investments.

FASB says stakeholders told the board those disclosures do not provide information that users of plan financial statements find useful. The disclosure requirement will still apply to aggregate net appreciation or depreciation in investments for the period, but plan sponsors will no longer be required to disaggregate those investments and disclose them by general type.

As for the third part of the accounting standards update, FASB provided a practical expedient for the measurement date of an employee benefit plan when month-end investment statements on plan assets do not perfectly match the company’s financial statement fiscal year-end date. Under prior rules, companies were required to find fair values for the differences in dates to make the measurements match perfectly. Under the new rule, companies can simply use the month-end date that is closest to the fiscal year-end date, although they’ll need to provide some disclosures to explain it.

In an alert on the changes, EY says it supports efforts to make financial reporting for employee benefit plans simpler. “We believe the new guidance is an important step forward in simplifying EBP accounting,” EY said.

The amendments take effect for fiscal years beginning after Dec. 15, 2015.