08 March 2002
Allan Cook, technical director of the Accounting Standards Board, said that although the ASB viewed the hostile response to FRS 17 as an 'over-reaction and misinterpretation', it might be necessary to modify the requirement to bring the UK into line with international accounting practices.
'It may well be that modification on both sides is necessary to achieve that,' he said. But he added that any changes to FRS 17-type standards would have most impact on international standards.
Cook's comments could be viewed as a shift in approach by the influential ASB, which recently indicated that there was little chance of modifying FRS 17 before its full implementation in 2003.
FRS 17 has been the subject of increasing alarm across both public and private sector pension schemes. It requires public sector employers to list assets and liabilities as gains or losses in their annual revenue accounts and is likely to highlight billions of pounds of underfunding across, for example, local authority schemes.
Some councils fear they may need to raise council taxes quickly to fund the shortfalls revealed by the standard.
But Cook told PF that the aim was not to expose unfairly the level of underfunding, which has been evident in the public sector for many years, but to provide a contextual snapshot of the value of any UK pension fund at a particular point in time.
The issue boiled over this week after Paul Myners, author of a high-profile Treasury review of institutional investment, called for reform of FRS 17. Myners said that pursuit of accountancy 'purity' should not be conducted with disregard for social consequences.
But Cook warned the pension profession not to get carried away with criticism and said that private companies were using FRS 17 as a convenient excuse to close final salary schemes in favour of cheaper alternatives.
PFmar2002
