|AECOM filed this Form 11-K on 06/14/2018|
Fixed Income Instruments
Fixed income instruments are valued based on prices received from the fund custodian. The custodian uses multiple valuation techniques to determine the valuation of fixed income instruments. In instances where there is sufficient market activity, the custodian may utilize a market-based approach through which trades or quotes from similar instruments with comparable durations, yields, and credit ratings are used to determine the valuation of these instruments. In instances where there is insufficient market activity, the custodian may utilize proprietary valuation models that maximize observable inputs. The valuation models may consider market transactions in comparable securities, the various relationships between securities, and/or market characteristics in order to estimate the relevant cash flows, which are then discounted to calculate the fair values. Fixed income securities, which are valued based on significant observable inputs, are classified within Level 2 of the valuation hierarchy because quoted prices of identical instruments are not readily available in active markets.
Collective Investment Trusts
A collective investment trust is a trust for the collective investment and reinvestment of assets contributed from employee benefit plans maintained by more than one plan. These investments are valued using the net asset value (NAV) provided by the administrator of the collective trust. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The NAV is used as a practical expedient to estimate fair value. Prior to the adoption of ASU 2015-07 (see Recent Accounting Pronouncements discussion below), collective investment trusts were classified within Level 2 of the valuation hierarchy because the NAVs unit price is quoted on a private market that is not active. Subsequent to the adoption of ASU 2015-07, the collective investments trusts are not classified within the fair value hierarchy; however, the amounts measured using NAV is disclosed to permit reconciliation of the fair value of investments to the Statements of Net Assets Available for Benefits.
Transfers Between Levels The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions of model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. We evaluate the significance of transfers between levels based on the nature of the financial instruments size or the transfer relative to total net assets available for benefits. For the years ended December 31, 2017 and 2016, there were no transfers between levels.
Recent Accounting Pronouncements In May 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-07, Disclosures for Investment in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07). ASU 2015-07 seeks to eliminate diversity in practice surrounding how investments measured at NAV under the practical expedient with future redemption dates have been categorized in the fair value hierarchy. It is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Plan adopted ASU 2015-07 for the plan year ended December 31, 2017, and applied it retrospectively for all periods presented, as required. Investments measured at NAV are not classified within the fair value hierarchy; however, the investments measured using NAV are disclosed to permit reconciliation of the fair value of investments to the Statements of Net Assets Available for Benefits. The impact of adopting this update is reflected in notes C, D, E, and F.
In February 2017, the FASB issued ASU No. 2017-06, Employee Benefit Plan Master Trust Reporting (ASU 2017-06). ASU 2017-06 clarifies and updates presentation and disclosure requirements for a plans interest in a master trust, and eliminates a redundancy relating to disclosures for plans with 401(h) accounts. ASU 2017-06 is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. Upon adoption, ASU 2017-06 is to be applied retrospectively to all periods presented. The Plans management is currently in the process of evaluating the impact of the adoption of ASU 2017-06 on its Plan financial statements.