The predecessor of the International Accounting Standards Board (the IASB) was the International Accounting Standards Committee (IASC). IASC’s early standards typically contained several options that allowed different companies to choose freely between different accounting transactions for similar transactions. E32 Comparability of Financial Statements On 1 January 1989, IASC published exposure draft E32 Comparability of Financial… Continue reading When IASC removed many options
Tag: Pensions
Time to retire IAS 26
When people think about pension accounting under IFRS Accounting Standards, they generally think about IAS 19 Employee Benefits. IAS 19 governs how employers should account for pensions. They often forget that a different standard, IAS 26 Accounting and Reporting by Retirement Benefit Plans, governs accounting by pension plans. In my view, the IASB should withdraw… Continue reading Time to retire IAS 26
Pension accounting under IAS 19
IASC completed a major revision of its standard on pension costs in 1998, when it issued IAS 19 Employee Benefits. But although that was a major update to the Standard, the revision did not involve a thorough overhaul of every important aspect of the Standard. Scope limitations adopted by the IASC at the start of… Continue reading Pension accounting under IAS 19
Own credit risk
The topic of own credit risk generates perhaps more strongly held views than any other accounting topic. For example, in around 2011, the IASB was developing a discussion paper on insurance contracts. Some of us visited one of the largest insurers in the world. They knew almost nothing about the project. But they had heard… Continue reading Own credit risk
Assumptions are not just a throw-away
The term ‘assumption’ figures prominently in some accounting standards, but can give the wrong impression. Where accounting standards refer to ‘assumptions’ The term appears in contexts where a preparer needs to make an accounting estimate. IAS defines accounting estimates as ‘monetary amounts in financial statements that are subject to measurement uncertainty’. Some IFRS standards use… Continue reading Assumptions are not just a throw-away
Does it matter that companies don’t consolidate pension funds?
Some people wonder why companies present pension liabilities net of the related plan assets. They suggest that instead companies should consolidate their pension plans. People making that suggestion think it would lead to companies presenting pension liabilities (gross) separately from the plan assets. This post explains why introducing a requirement to consolidate pension plans would… Continue reading Does it matter that companies don’t consolidate pension funds?
Discount rates for very long maturities
A common question about discount rates is how to estimate a discount rate for assets and liabilities with very long maturities. Such a discount rate contains a term premium that cannot be based on evidence and can never be back-tested. As a result, that term premium is not really an estimate, it is just a… Continue reading Discount rates for very long maturities
All disclosure requirements belong in one standard
Disclosure requirements in IFRS Standards are distributed throughout almost all of the standards. In my view, the IASB should consolidate all its disclosure requirements into one location in one standard. I explain that view in a comment letter I have submitted on the IASB’s exposure draft Disclosure Requirements in IFRS Standards—A Pilot Approach. My response… Continue reading All disclosure requirements belong in one standard