Pension Plan Accounting Rules To Be Overhauled
The Financial Accounting Standards Board (FASB), a non-governmental panel that reviews and establishes general accounting standards, on Thursday approved a project to begin overhauling the standards for pension plans and other post-retirement benefits. For the time being, however, the FASB won't do away with any of the widely criticized "smoothing" mechanisms that allow companies to obscure the values of their financial obligations and mask volatility in their earnings.
In a unanimous vote, the FASB approved a recommendation by its staff to split the project into two parts, including an initial set of revisions by the end of 2006. Among the staff's suggested, initial revisions: Companies would be required to include an asset or liability on their balance sheets, to reflect the amounts by which their pension and other post-retirement benefits plans are overfunded or underfunded. Essentially, the board would take numbers that now are relegated to obscure footnote disclosures and move them onto companies' balance sheets.
Source: TwinCities.com Pioneer Press