Say no to FRS 17: BAA's Mike Hodgkinson flies in the face of pension legislation
BAA, the international airport group, has said it would not move its pension scheme assets over to bonds as a result of the change in pension accounting forced by the new FRS 17 rule, Michelle Perry reports.
Andrew Hill, BAA’s group financial controller, told Accountancy Age: ‘There will be no immediate rush away from equities into bonds as a result of accounting change.’
BAA’s move appears to lend support to FRS 17 when it is under fire from other companies who have seen their profits drop as a result of the new rule.
FRS 17 forces companies to recognise the full cost of pensions in a single year rather than spread over a number of years. BT has already announced a #4bn deficit in its pension fund as a result of the new rule.
The airport operator, led by chief executive Mike Hodgkinson (pictured right), announced operating profits of #355m post FRS 17. Group operating profit pre-FRS 17 would have been #374m for the year ending 30 September 2001. BAA is one of the few companies that have opted for early adoption of the new rule, which takes effect in stages until 2003.
But Hill said: ‘Adoption of FRS 17 increased charges of #19m to operating profit. But it has also included an asset of #227m on the balance sheet as opposed to a credit provision of #12m.’
Hill added: ‘The way in which the standard seeks to record things in the balance sheet and profit and loss account is more logical than hitherto seen.’
FRS 17 harmful to UK companies www.accountancyage.com/ Practice/1126377.
The numbers you crunch tell a story. Your expertis...
23yEmbracing user-friendly AP systems can turn the tide, streamlining workflows, enhancing compliance, and opening doors to early payment discounts. Read...
View articleOrganisations can enhance their financial operations' efficiency, accuracy, and responsiveness by adopting platforms that offer them self-service cust...
View articleIn a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...
View resourceDiscover how AP dashboards can transform your business by enhancing efficiency and accuracy in tracking key metrics, as revealed by the latest insight...
View articleThe ICAEW confirms new vice president, with senior heads appointed at KPMG and EY. Within the mid market, a flurry of end of year partner appointments...
View articleThe ICAEW confirms new vice president, with senior heads appointed at KPMG and EY. Within the mid market, a flurry of end of year partner appointments...
View articleThis follows an investigation into undisclosed personal loans and issues with an acquisition. Despite challenges, the company aims to achieve £1bn in ...
View articleThe ICAEW confirms new vice president, with senior heads appointed at KPMG and EY. Within the mid market, a flurry of end of year partner appointments...
View articleThere is optimism that the IPO market will rebound in the second half of 2024, driven by pent-up demand and potential improvements in economic conditi...
View articleThe ICAEW confirms new vice president, with senior heads appointed at KPMG and EY. Within the mid market, a flurry of end of year partner appointments...
View articleKPMG confirms reappointment of it's UK chair, while EY announces Janet Truncale as the next EY global chair and CEO Read More...
View articleThe ICAEW has announced the appointment of its forthcoming chief executive Read More...
View article