KPMG updates employee benefits handbook with latest accounting guidance
KPMG’s latest benefits handbook is built for the questions that slow audits and compensation work: which ASC applies, and where judgment changes the answer.
The 2025 edition of KPMG’s Employee Benefits Handbook is set up for immediate use across ASC 420, ASC 710, ASC 712, ASC 715 and ASC 718-40, putting compensation, retirement, postemployment and stock-based questions in one place. It is a time-saver for the accounting judgments that keep slowing down audit and advisory work. That setup helps teams separate plan design from financial reporting and spot technical edge cases faster.
Why the update matters now
The handbook addresses a workforce landscape shaped by global pressures, stakeholder demands, workforce globalization, artificial intelligence and technological advancements. Employee-benefit accounting is no longer just a year-end close exercise. It now sits inside broader decisions about retention, liability management and how a company signals value to employees without creating a reporting problem.
The 2024 edition pointed to changing economic conditions, low attrition, downsizing, restructuring, retirement plan changes and financial market fluctuations as forces that can affect benefit plan design and earnings volatility.
Where the handbook is most useful in day-to-day work
The new framing is especially practical for auditors, technical accounting professionals and advisory teams because it gathers the questions that usually get scattered across memos, plan documents and disclosure drafts. In KPMG’s FRV Weekly dated September 29, 2025, the handbook was updated with the latest interpretive questions and examples for general employee compensation, nonretirement post-employee benefits, retirement benefits and ESOPs. That makes it more useful than a static summary of standards when a client is revising compensation design or reworking a benefit package.
Common uses include review bottlenecks such as:
- A compensation redesign that affects stock-based awards and other arrangements under ASC 718-40.
- A restructuring or exit program that raises termination-benefit questions under ASC 420 or ASC 710.
- A change to retiree medical, pension or other postretirement benefits that lands in ASC 715.
- An ESOP issue where classification, measurement or disclosure needs a technical check.
- A benefits disclosure question where the accounting answer depends on how the plan is structured, not just what management intended.
The accounting judgments underneath the numbers
Benefits accounting gets difficult because the balance sheet and income statement depend on estimates that can change with markets, headcount and policy decisions. Discount rates, service costs, curtailments and disclosure requirements can quickly turn a standard-looking employee-benefits issue into a material technical question. The work includes deciding which assumptions belong in the model and how those assumptions affect earnings.
The Accounting Standards Codification is the single official source of authoritative, nongovernmental U.S. GAAP, FASB says, so the handbook functions as a practical guide to applying that framework, not as a substitute for it. Within that structure, ASC 715 governs pensions and other postretirement employee benefits, while ASC 718 covers stock compensation, including the kinds of arrangements that often sit closest to compensation design and retention strategy.
PwC’s pension and employee benefits guide points to the discount rate, expected future salary and benefit levels, and expected long-term return on plan assets as core inputs, where small differences in judgment can produce very different accounting outcomes.
Why the topic keeps getting more complex
External benchmarks show the same pressure points showing up across the market. EY’s 2025 Workforce Benefits Study, based on 800 U.S. employers, highlights rising medical costs, a diversifying workforce, technology-driven disruption, macroeconomic uncertainty and expanding leave-management programs. Those are operational issues, but they spill directly into accounting when a company revises benefit offerings, changes eligibility or adjusts plan design to keep pace with labor conditions.
In KPMG’s workforce technology material, AI and AI agents are increasingly integrated into daily operations and workforce optimization. Automation is changing how work gets done, how work is measured and, in some cases, how reward structures are designed.
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