Pension Accounting Going Global
Global Pensions Magazine reports that the International Accounting Standards Board (IASB) has added pension accounting to its work plan. Smoothing and cash balance plans are two of the topics to make their way under the microscope. Executed in two stages, the goal is for IASB and Financial Accounting Standards Board (FASB) rules to converge by end of Phase Two.
According to its website, the International Accounting Standards Board is an "independent, privately-funded accounting standard-setter based in London, UK. The Board members come from nine countries and have a variety of functional backgrounds." Similarly, the FASB is self-described as "the designated organization in the private sector for establishing standards of financial accounting and reporting." (Click here to download Facts About FASB.)
Accounting harmonization is the wave of the future as more and more companies go global and investors seek ease of financial statement use. What will be interesting to know (and only time will tell) is whether:
1. The business community outside the U.S. is likely to push back
2. Disagreement will focus on the same issues (In the US, liability calculation methodology has taken center stage.)
3. Shareholders will demand the same level of transparency as in the U.S. (or more)
4. The extent to which common accounting standards will facilitate capital market development with respect to cost, availability and liquidity.
