Employers oppose IASB proposals

Resistance to defined benefit rules

By Victoria Papandrea
Mon 08 Sep 2008

Employers worldwide oppose the IASB's proposed defined benefit accounting rules, a global survey has found.

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The new defined benefit accounting rules proposed by the International Accounting Standards Board (IASB) have been opposed by companies around the world, according to a survey by Watson Wyatt Worldwide.

While many employers believe improvements to the accounting standards in several key areas are needed, most are not in favour of IASB's proposals.

The suggestion to recognise all plan experience immediately in the profit and loss (P&L) account - an option under consideration by IASB, was not supported by 80 per cent of employers, the global survey found.

Of the 131 finance and employee benefit directors surveyed across 17 countries, 46 per cent said the proposed changes to cost recognition would discourage them from offering defined benefit plans in the future.

If the proposed changes were implemented it could mean higher assessments of liabilities, and increased volatility in employer financial statements, Watson Wyatt Australia head of benefits practice Brad Jeffrey said.

"The IASB's proposal would make significant changes to the way retirement benefits are accounted for under the International Financial Reporting Standards (IFRS)," he said.

"With a global convergence of accounting standards on the horizon, these changes could have important implications for publicly traded companies around the world."

To develop a workable standard, it is critical for companies to communicate their concerns, and engage the IASB in a dialogue on the proposal - as it evolves into a final standard, Jeffrey said.

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