GLOBAL - The International Accounting Standards Board (IASB) has unveiled proposed amendments to IFRIC 14 rules concerning pensions minimum funding rules shown on the balance sheets, as officials say "unintended consequences" mean some prepayments are not shown as an asset.

An exposure draft of the proposed amendment has been opened to comments as pensions and accounting experts have advised the IASB that IFRIC 14, as it stands, means any surplus in a defined benefit pension plan may not be treated as an economic benefit to the company but is instead seen as an expense, if the future minimum funding contribution required is more than the future IAS19 service cost.

More specifically, companies would expect it to be treated as an asset on the company's balance sheet in situations where the prepayment will deliver future economic benefits in the form of reduced cash outflows in future years - a view the IASB now shares with commentators.

This particular development is said to accompany, but is not part of, the proposed amendments to IAS19, which is currently being looked at by the IASB, and should "remedy this unintended consequence" raised by interested parties.

Responses to the Prepayments of a Minimum Funding Requirement paper must be submitted to the IASB by 27 July.

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