The extension means companies will have more time to come to terms with the radical shift in measuring assets and liabilities using market values rather than at historical cost. The Accounting Standards Board hopes it will also cause less confusion during the switch over from UK GAAP to IASs in 2005.
Without the proposed amendments, businesses with a year-end of June would have to disclose their pensions schemes’ assets and liabilities in full this December, without the traditional smoothing effect.
Mary Keegan, ASB chairman, took the decision after the global accounting standard setter, IASB, said it would revisit its pensions standard ahead of the 2005 deadline when all listed companies in Europe must comply with international accounting standards.
Keegan and other national standard setters have been pressing the IASB for around 18 months to make a decision on its pension rule before forcing companies to make fundamental accounting changes ahead of the 2005 deadline.
The international pension rule is different to the new UK rule in that it still allows for the smoothing of pensions surplus and deficits.
But Keegan is hopeful the IASB will update its rule to be more like FRS 17 which she considered ‘to be superior to the present international standard’.
‘Without the proposed amendment, these companies must all adopt FRS 17 in full for their interim statements at December 2002, and would then face the risk of having to change their accounting a second time when they are required to use IASB standards for their group accounts from 2005,’ said Keegan.
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