The International Accounting Standards Board (IASB) has published for public comment a discussion
paper on International Accounting Standard (IAS) 19, Employee Benefits. The paper sets out the IASB’s preliminary views on how the accounting for some post-employment benefits, including pensions, could be improved. The discussion paper addresses concerns that the accounting model set out in IAS 19 is inadequate and should be reviewed. Constituents have pointed out that:
- The deferral of the recognition of gains and losses leads to misleading figures in the balance sheet;
- The multiple options for deferring recognition lead to poor comparability across companies;
- The lack of clarity in the definitions of benefit promises lead to inconsistencies and poor comparability for those benefit promises that include a promised return on contributions linked to an asset or an index;
- The required measurement method is inadequate for those benefit promises that include a promised return on contributions linked to an asset or an index.
The IASB’s preliminary views on how to address these issues are to remove the options for deferred recognition of gains and losses in defined benefit plans and to introduce a new classification of benefit promises into contribution-based promises and defined benefit promises, with a new measurement attribute for contribution-based promises. The IASB plans to redeliberate the issues and publish an exposure draft of proposed amendments to IAS 19, with a view to issuing a revised standard by 2011.
Preliminary Views on Amendments to IAS 19, “Employee Benefits” will be available for comment until September 26, 2008 at www.iasb.org. |
