May 2010

A Smoother Approach to Pension Accounting

From CFO.com

The International Accounting Standards Board's long-awaited exposure draft on IAS 19, the standard that governs pension accounting, may turn out to be good news for companies. In a reversal of the proposals that were originally floated, under the exposure draft the impact of asset gains and losses would be reflected in other comprehensive income (OCI) rather than in profits and losses, lessening their impact on a company's earnings.

"Previous proposals would have magnified the volatility. But with this change we may actually see less volatility," both compared with current IASB standards and current U.S. standards, says Jim Verlautz, senior actuary and principal for Mercer US. Verlautz participated in a webcast with IASB officials last week to discuss the draft.

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