ASB rounds on FRS17 critics
UK- The UK’s Accounting Standards Board (ASB) has rounded on critics of the new accounting standard FRS17 saying it is would be wrong to reassess the approach. In an interview with the Financial Times, Mary Keegan, chair of the ASB, stood by FRS17 saying: “it is a good standard and therefore I will preach its good word and defend it."
The ASB, who introduced FRS17 in 2000, says it would be wrong to give in to critics by altering the standard. Earlier this week, the Confederation of British Industry (CBI) said FRS17 was affecting the competitiveness of businesses by introducing volatility into company accounts.
The CBI is pressing the ASB to adapt to international standards that allow fluctuations in the value of pension funds to be smoothed out over a few years. But the International Accounting Standards Board is revising certain elements of pensions reporting that are due to be adopted by the EU in three years time. The ABS has countered the CBI by suggesting it would be folly to align itself with a standard that is being changed.
FRS17, which comes into full force next year, has also been blamed by many companies as the reason behind the closure of generous final salary schemes. British Telecom, J Sainsbury, Iceland and Ernst & Young recently wound down their final salary schemes.
But backers of the standard say the new procedure has not created deficits, merely forced companies into revealing them and that, as such, it is being used as a scapegoat
In the interview, Keegan said: “if FRS17 is causing curtailing of schemes simply because information is being made available, then that makes me worry about management processes.
“It is far more likely that what we have seen has been a continuation of what we have seen over a number of years- a gradual curtailment of defined benefit schemes.”