NORWALK, Conn. — The FASB's vote last week to start overhauling its pension and other post-retirement benefits accounting statements is expected to give another boost to the concept of liability-led investing.
The Financial Accounting Standards Board voted Nov. 10 to start overhauling its Statement 87 on pension accounting and Statement 106 on accounting for retiree health care and other non-pension post-retirement benefits.
"While the accounting and reporting issues do not appear to lend themselves to a simple fix, the board believes that immediate improvements are necessary, and will look for areas that can be improved quickly," Chairman Robert Herz said in a statement.
The FASB plans to conduct the project in two phases. First, it expects to issue a standard before the end of 2006 "to improve transparency by requiring that the funded or unfunded status of defined benefit and other post-retirement benefit plans … be recognized in the balance sheet," according to the statement. Second, it would address issues such as how to best recognize and report in earnings the elements that affect the cost of providing post-retirement benefits.
"In conducting the project, the FASB will seek the views of parties currently involved in other, independent reviews of the pension system including the Department of Labor and the Pension Benefit Guaranty Corp.," according to the statement. Also, the FASB will work with the International Accounting Standards Board and other organizations "toward international convergence of accounting standards," the statement said.