In this edition we focus on the IASB's changes to employee benefit accounting. We look at the ASB's latest comments on the future of UK GAAP and the IASB's revenue recognition standard.
The headline changes to IAS 19 are not a surprise - for example the removal of the corridor option. The major change for most UK companies affects profit and loss. The current expected return on plan assets is replaced by a credit calculated at the liability discount rate. Expected returns for a typical pension plan portfolio can be around 1% higher than AA discount rates in current market conditions. This is expected to dent UK reported profits by around £10 billion (based on UK plc pension assets of around £1,000 billion).
