Accounting for costs: current problems
Article Abstract:
The UK's Accounting Standards Committee (ASC) has issued ED 39, Accounting for Pension Costs, to deal with certain changes in pension law to prevent overfunding of pension plans. ED 39 proposes to spread surpluses received through new tax law in the form of cash refunds over an unspecified future period. This ignores the balance sheet position and fails to recognize contractual liabilities. It would be better to have no standard for three years and let the surpluses be dealt with than to bring the standard into disrepute. The methods of pension funding have a bearing on this situation as well. There are three unfunded types: pay-as-you-go, terminal funding, and balance sheet provision. The funded types are: defined contribution and defined benefit. Cost accounting for each is different and highly dependent upon interpretation.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1987
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New rules pose problems for auditors
Article Abstract:
New pension rules and regulations from the Occupational Pensions Board include: the Statutory Instrument 1046-1986; the Statement of Recommended Practice (SORP) No. 1: 'Pension Scheme Accounts'; Memo No. 82 from the Inland Revenue Superannuation Funds Office; and the draft auditing guideline on pension schemes. The auditor of pension funds must be familiar with these, as well as the four parts of a pension scheme annual report: the trustee's report, the accounts, the actuarial statement, and the investment report. The auditor need only actually audit the accounts, making sure that employers and employees are paying the amounts stipulated to the pension and that the insurance company or other investment vehicle administering the pension is conforming to law.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1987
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