The Accounting Standards Board(AcSB)has decided not to proceed with its proposed pension and benefit accounting changes after considering the comments from a wide spectrum of stakeholders.
It believes these proposals would have enhanced Canadian financial reporting, but members agreed that now is not the right time to implement changes to accounting for employee future benefits.
The changes that the AcSB proposed were recognition of the full funded status of a defined benefit(DB)plan in the sponsor’s balance sheet, immediate recognition of changes in funded status on the balance sheet, and alignment of the measurement date with the balance sheet date.
The proposed changes were an attempt to harmonize Canadian standards with those in the United States.
“The proposals released in March would have applied to many plan sponsors from the end of 2007, and could have affected the sponsor’s balance sheet dramatically,” says a special notice from Eckler Ltd.
The AcSB acknowledges the many issues associated with measuring the balance sheet amount, and that entities already disclosed the funded status of their defined benefit plans.
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It will now focus on changing the implications of adopting IAS 19, Employee Benefits on the date of transition to International Financial Reporting Standards(anticipated in 2011), as well as the International Accounting Standards Board’s current project to amend that standard.
For more information about IAS 19 on Deloitte’s website, click here.
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