EUROPE - The European Financial Reporting Advisory Group (EFRAG) has backed the adoption of the amendments to IAS19 in its recommendation to the European Commission, even though it believes that these additional options "impair comparability".
The body also noted that the option of allowing immediate recognition of actuarial gains and losses in pension plans outside the normal profit and loss account in a statement of changes to equity called the statement to recognised income and expense (SORIE) should not “pre-empt” the wider debate on the concept of recycling.
In December last year, the IASB amended the IAS19 in line with UK’s FRS17 allowing: a) the introduction of an additional recognition option for actuarial gains and losses arising in post-employment defined benefit plans, b) the clarification that a contractual agreement between a multi-employer plan and participating employers that determines how a surplus is to be distributed or a deficit funded will give rise to an asset or liability, c) the introduction of requirements for defined benefit group plans in the separate or individual financial statements of entities within a group and d) a requirement for additional disclosures.
EFRAG chairman Stig Enevoldsen (pictured) noted: “Although we generally believe that additional options impair comparability, we understand, in the circumstances, the objectives of the IASB in introducing the third option and support them. We acknowledge that a wider review of the subject is still on IASB’s agenda.”
He added: “We believe that the full debate of the larger issue of comprehensive income and the concept of recycling, which will require its own full due process, should not be pre-empted. We acknowledge the IASB’s statement that these amendments do not prejudge any discussion the IASB is yet to have regarding the project on comprehensive income and a comprehensive review of accounting for post employment benefits.”
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