16 September 2008

EC cautious on IASB moves

The European Commission has said it expects the IASB to proceed with extreme caution in the implementation of improvements to IAS19 accounting standards planned for 2011.

Vladimír Špidla, former prime minister of the Czech Republic and now Czech EC commissioner for employment, social affairs and equal opportunities, wrote in a letter to MEPs Ria Oomen-Ruijten, Philip Bushill-Matthews and Steven Hughes, that he shares their concerns that “changes in the way certain transactions or commitments are accounted for could drive employers’ behaviours in adverse ways”.

In a response to questions posed by the three MEPs earlier this year, Špidla said: “I therefore share the concerns behind the questions you posed and I would expect the IASB to proceed with extreme caution and to conduct a full, careful analysis of the impact of any change before adopting any new standard.”

He added: “In this context I can inform you that since 2007 the Commission has requested the IASB provide detailed impact assessments/effect studies before publishing any major new standards. This would certainly include a new standard on pension accounting.”

After the current discussion paper setting out the IASB’s preliminary views on which parties can comment until September 26, the IASB plans to examine the comments and to have another look at their first draft, before issuing a revised paper in the form of an exposure draft of amendments to IAS19, again open for comment.

“The IASB may also hold a public hearing and organise field tests later in the process as part of its work to refine the standard before issuing a final standard, which is envisaged for 2011,” concluded Špidla.

German multinational BASF AG recently revealed around 95% of its active-member pension obligation will shift to the IASB's proposed fair value pension measure, if the standard-setter's recently-published proposals to reform pension accounting become GAAP.

BASF comments only appeared on the IASB website on 2 September, but fresh information arose on 12 September on what the IASB's contingency plans may be if it fails to come up with a workable solution for contribution-based plans.

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