The International Accounting Standards Board wants employers to move quickly to report changes in the value of defined benefit pension plan assets and the estimated value of benefits obligations.
IASB, London, has incorporated those goals in an exposure draft of proposed amendments to International Accounting Standard 19 Employee Benefits.
The proposed standards could affect defined benefit post-retirement health insurance programs as well as pension plans, IASB officials report.
Users of current IASB standards can “smooth over” changes from year to year. Advocates of smoothing say it helps employers adjust for short-term market fluctuations; critics say smoothing lets employers create an unrealistically rosy picture of defined-benefit plans’ performance.
The draft amendments would require entities using the standard to:
- Account immediately for all estimated changes in the cost of providing these benefits and all changes in the value of plan assets.
- Use a presentation approach that would clearly distinguish between different components of the cost of benefits.
- Disclose more information about risks associated with defined benefit plans.
“The exposure draft does not address measurement of defined benefit plans or the accounting for contribution-based benefit promises,” officials say. “The IASB will consider after 2011 whether to address these topics.”
When IASB officials released a discussion paper concerning the proposed amendments in 2008, they received 150 comment letters.
Comments on the newly released draft amendments are due Sept. 6.
“The board and staff will undertake further outreach during the comment period to ensure that the views of all interested parties are taken in to consideration,” IASB officials say.