The International Financial Reporting Interpretations Committee (IFRS IC) will not introduce new rules for discount rates relating to use of foreign currencies.
The IFRS IC tentatively concluded at a meeting this month that existing pensions accounting literature already provides sufficient basis for defined benefit plan sponsors to determine discount rates.
The decision means that the IFRS IC will not to add the issue to its standard-setting agenda.
The decision affects sponsors that are currently applying International Accounting Standard 19, Employee Benefits (IAS 19), in countries that have adopted another country’s currency as its official currency.
Interested parties have 60 days to comment on the decision.
In addition, the committee tentatively concluded that the “currency and term of the bonds must be consistent with the currency and estimated term of the post-employment benefit obligations.”
The IFRS IC has also noted that the discount rate did not reflect the expected return on plan assets.
Meanwhile, the International Accounting Standards Board (IASB) has concluded work on its research project into discount rates and said it would not seek public feedback on a discussion paper dealing with the topic.
In a paper presented to the board’s 21 March meeting, however, staff noted that the board “will be addressing project findings relating to existing requirements in its work on individual projects as appropriate.”
IASB staff presented a draft research paper to the board on 21 January last year. The paper provided a summary of discounting across the whole of International Financial Reporting Standards (IFRS).
Together with pensions accounting, discounting ranked as a priority for the board’s constituents during the board’s 2011 agenda consultation process, as well as during its latest consultation.
The two main outputs from the project, staff said during the 21 March meeting, had been to provide a summary of discounting under IFRS and also to compile a list of issues for staff to consider when developing accounting requirements that involve discounting.
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