OPINION - The upside of FRS 17.

Make no mistake: FRS 17 has never been popular with British business.

Only a fortnight ago a study by banker HSBC warned the new standard requiring companies to value their pension funds at market values, not historic values, could be harmful to some of Britain’s largest companies.

Yet last week international airport group BAA reported an operating profit of #355m under the new controversial accounting standard.

BAA is one of the few companies that has opted for early adoption of the new accounting rule, which takes effect in stages until 2003.

Admittedly that same result would have been some #19m higher pre-FRS 17. But that’s hardly the volatility we were warned about. And that came in a depressed market.

But is there anything wrong with the fundamental principle of using market valuations? Who knows, perhaps we will hear fewer warnings of ‘volatility’ once the stock market recovers.