President, Lucas Financial
Reporting, Wilton, Conn.
Timothy Lucas was the driving force in writing and guiding Financial Accounting Standard 87, the controversial pension accounting standard. He suffered through its twists and turns, hearings, comments and debate at the Financial Accounting Standards Board before FAS 87 was adopted in December 1985.
Heading the accounting project was his first assignment after joining FASB in 1979 as director of research and technical activities. In essence, FAS 87 calls for publicly held companies to more accurately reflect the expense and funded status of their pension funds in their financial statements. The additional disclosure requirements revamped the way financial statements were prepared and roiled the accounting and actuarial professionals.
And FAS 87 continues to evoke criticism, taking its place beside ERISA for creating upheaval in the pension investment industry.
Despite its controversial legacy, Mr. Lucas says FAS 87 is better than what the industry had before —nothing.
"I believe it has withstood the test of time," said Mr. Lucas. "Lots of people have focused on some of the shortcomings, but I'm a glass-half-full guy. Before FAS 87, the glass was not half full, it was empty."
He said accounting standards issued by the FASB "are the art of the possible rather than the ideal" and are an improvement over the lack of disclosure and pension accounting standards in existence before 1985. As a result of FAS 87, he said, "people have better information."
Mr. Lucas left the FASB in May 2002. He formed his own consulting firm, Lucas Financial Reporting in Wilton, Conn., which focuses on GAAP accounting (GAAP stands for generally accepted accounting principles).
Dennis Breresford, former FASB executive director and now professor of accounting at the University of Georgia, Athens, said Mr. Lucas performed a valuable, but often thankless, task. "He did a terrific job on FAS 87…. He was invaluable."