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September 25, 2002
U.K. Pension Accounting Coming to U.S.
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id Tweedie, chairman of the International Accounting Standards Board and inventor two years ago of the FRS17 standard on pension disclosure, expects to see his standard rolled out around the world soon, according to the Financial Times.

This stems from Tweedie's meeting last week with Bob Herz, chairman of the Financial Accounting Standards Board, the standard-setting body for the U.S. The two men, along with their boards, agreed on a convergence of their different standards by 2005. In essence, the Financial Times says, it means that FRS17 will move towards a universal, global application.

But given the United Kingdom's experience, it's not likely to be popular with American companies. Their pension fund liabilities will be exposed for all to see, rather than smoothed out so the true position was obscured.

But Tweedie - or, as the Financial Times calls him, Sir David - is delighted. He told the publication that he's always thought companies should "tell it like it is."

In the UK, companies are - thanks to FRS17 - starting to do just that.

"The old UK pensions standard was based on actuarial values, and the disclosure smoothed the figures," Tweedie said. "This meant that you could have an enormous deficit in the fund, but the company would be showing an asset in the accounts. The underlying deficit was never apparent."

His long-standing ambition has been to bring accounting theory down to earth. If the ordinary person finds it difficult to understand, he reasons, then something should be done about it.

Click here to read the Financial Times article, via Yahoo!

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