UK - The government and accounting standards board (ASB) are heading for conflict over the introduction of the FRS17 accounting standard. The warning came after the chairman of the ASB, Mary Keegan, gave a speech at the NAPF's investment conference in Edinburgh in support of the new accounting principle which has been blamed for the recent wave of defined benefit closures.
One pension fund delegate claimed that, in a conversation with a representative from the department of work and pensions (DWP), it was said that the ASB had not consulted with the DWP over the drafting and implementation of FRS17. The DWP representative claimed FRS17 does not conform to its own accounting proposals and that conflict between the two bodies is looming.
However, Keegan refuted the claim, saying that both the treasury and DWP sent observers to all meetings relating to the new standard and that the government was not kept in the dark about any of the ASB's plans. "The governments was fully informed of our plans every step of the way," she claimed.
Elsewhere, Keegan said that FRS17 is intended to reduce balance sheet volatility of pension funds and that it is being unfairly blamed for the closure of DB plans. "I think many companies are using FRS17 as an excuse to reduce their pensions obligations. And it is particularly ironic that Ernst & Young closed theirs, citing FRS17 as the main culprit.
“I would have thought a firm of accountants would be aware of the anomalies FRS17 seeks to address. In their case in particular, I don't think FRS17 had anything to do with their decision to close their DB scheme at all," she said.