Dogma and expediency don't mix
Article Abstract:
Issues discussed concern a proposal by the Accounting Standards Board on pension accounting called FRED 20, Retirement Benefits. The author argues that this standard will introduce volatility into the accounting process because the deficit or surplus in the pension fund is to be measured annually.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 2000
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The 'corridor': an accounting no-go area
Article Abstract:
The International Accounting Standards Committee's (IASC) proposed accounting standard for pensions is misguided. It proposes the annual revaluation of pension fund assets and liabilities such that the net figure is included in the plan sponsor's balance sheet while the actuarial gains and losses identified by the annual valuation are to be reflected in the balance sheet only if they exceed the bounds of a 'corridor.' This means that changes in the valuation will not be recognized if they total less than 10% of the pension fund's gross assets and liabilities. The proposed standard is intended to replace IAS 19, which the IASC believes to be flawed. However, the reality is that the existing standard is far more sensible than what the committee is proposing.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1997
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Fixed and fudged
Article Abstract:
The UK Accounting Standards Board's FRS 15, Tangible Fixed Assets, represents a good codification of sound accounting practices but it will encounter some difficulties in its implementation. One problem will be in the area of revaluation, a field where the law is observed to be too detailed and may act more as a disincentive to its intended target. FRS 15's provision on cyclical repairs reverses FRS 12, Provisions, Contingent Liabilities and Contingent Assets, that banned the practice of matching such costs against the revenues generated from the use of such assets. The new regulation stipulates that matching those costs are allowed provided they are subsumed within the accounting of the fixed asset, a procedure that is difficult to accomplish in actual practice.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1999
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