IASB Brings IAS 19 In Line With FRS 17

December 16, 2004 (PLANSPONSOR.com) - The International Accounting Standards Board (IASB) has amended the international pension cost standard IAS 19 to bring it into line with the UK retirement benefits standard FRS 17, IPE reported.

Regulators want UK and Irish companies to recognize changes in the value of their benefit plans right away, rather than over a long period, the IPE report said.   Until now, IAS 19 has required companies to recognize actuarial gains in profit and loss, either in the period in which they occur or spread over the service life of their employees while FRS 17 requires gains and losses to be recognized in the period in which they occur. However, this can be done outside profit and loss, through a statement of recognized gains and losses.

The IASB now said that companies can go outside the profit and loss account to the IAS19 standard, IASB said. The amended standard says officials can choose recognizing actuarial gains and losses in full in the period in which they occur, outside profit or loss, in a separate statement of recognized income and expense.

“The amendment today allows entities to choose a simpler more transparent method of accounting than is commonly adopted at present. I hope that many entities will take the opportunity of improving their financial reporting this way,” said Sir David Tweedie, IASB chairman, told IPE.

Consultants Watson Wyatt described the amendment as a “stop-gap measure” to accommodate UK and Irish companies who have already adopted or disclosed results on the FRS 17.

The amended IAS 19 is a final standard from the IASB. Its adoption by listed European companies depends on approval by the European Union. This is expected to take between six and nine months.