IASB outlines post-employment proposals

News Article - Friday, March 28, 2008

filed under: Regulatory

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The International Accounting Standards Board (IASB) has published a new discussion paper aimed at sparking talks about post-employment benefits.

Outlining the board's preliminary views on ways to improve accounting for pensions and other benefits, the paper addresses the concerns of a range of different parties.

The paper particularly explores issues surrounding the IAS 19, Employee Benefits accounting model, calling for the standard to be reviewed.

Accountants claim that the standard can lead to misleading figures about financial position and the London-based IASB has laid out a series of alternative options to address problems relating to the deferral of recognition.

Developed in consultation with the IASB's Employee Benefits Working Group, the discussion paper notes that the multiple options for deferring recognition currently in place "lead to poor comparability across companies", as does the lack of clarity in the definitions of benefit promises.

The IASB, an independent accounting standard-setting body, proposes removing the options for deferred recognition of gains and losses in defined benefit plans and introducing a new classification of benefit promises.

Sir David Tweedie, IASB chairman, commented: "The financial statement of a company must provide investors, analysts and companies with clear, reliable and comparable information on a company's pension obligations. It is in the interest of all of us to find ways to improve this area of financial reporting and the discussion paper on post-employment benefits is the starting point."

Good accounting and management reporting software can help companies to ensure that they comply with their responsibilities regarding post-employment benefits and pensions accounting.

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