EUROPE - The Accounting Standards Board is going "back to basics" for its research project into pensions accounting.

At stake are some of the most "thorny issues" of how to account for post-retirement benefits.

The ASB is leading the project under the ‘Proactive Accounting Activities in Europe' - "PAAinE" - banner coordinated by The European Financial Reporting Advisory Group and European national standards setters.

"The board decided to adopt a ‘back to basics' approach of examining the fundamentals of pensions accounting," says project director Hans Nailor.

The ASB is being assisted by a Pensions Advisory Panel appointed by the board and a pan-European Working Group selected by EFRAG.

"An objective of the project is to contribute to the development of principles-based accounting standards for pensions and other post-retirement benefits," Nailor says in a progress report.

"In the initial part of the project we have considered what should be reflected in the measurement of liabilities, before going on to address how the measurement should be done," Nailor adds.

"We take a fresh look at the thorny issues of whether future salary increases should be reflected in the liability when benefits are linked to future salary growth and whether the liability should include so-called discretionary benefits.