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Administration December 3, 2003
FASB Agrees To Look At Pension Accounting
March 12, 2003 (PLANSPONSOR.com) - The Financial
Accounting Standards Board (FASB) has agreed to take a closer
look at pension accounting by voting today to add it to its
formal agenda of items for review.
Reported by Eric Hazard
The accounting rulemaker said the agenda addition, in response to a plethora of complaints received recently about current pension accounting standards, will focus specifically on how to enhance companies’ disclosure of their pension finances to address growing concern by investors and others.
‘Smoothing’ Over
Pension rules have attracted attention in recent months with a maelstrom of pension underfunding problems (See America’s Pension Crisis ).
The current rule governing pension accounting standards, FAS No 87, has come under fire for its language regarding “smoothing.” (See Smooth Move ) Smoothing allows companies to take certain assets and obligations off balance sheets and amortize them as income or expenses over time. Additionally, companies may be allowed to report their expected return on assets, instead of actual losses and gains.
Critics of FAS No 87 argue the rule should be amended to require more frequent pension finance reporting from companies. Currently, companies are only required to report those figures annually (See Finance Pros Say Pension Rules Need Change ).