Dataline: Pension/OPEB Accounting -- An Analysis of the IASB's Exposure Draft (No. 2010-23)

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The IASB has proposed changes to the accounting for defined benefit pensions and other postretirement benefits (OPEB). While the proposal is not the result of joint deliberations, the objective of the IASB and FASB is to eventually adopt a converged standard. Thus, the changes proposed by the IASB will be considered by the FASB for purposes of achieving convergence. Under the IASB’s proposal, fluctuations in the value of the benefit obligations and plan assets (i.e., gains and losses) would be recognized in the balance sheet in full through a charge or credit to other comprehensive income in the periods in which the gain or loss occur. Those amounts would not be subject to subsequent amortization into net income, as currently required under U.S. GAAP. The final amendments are expected to be issued by mid-2011, with a likely effective date of January 1, 2013. This Dataline highlights the key provisions of the IASB's proposal and offers PwC's observations on it.

[Note. Because the FASB and IASB's goal is to converge their standards for pension and OPEB accounting, both U.S. and non-U.S. companies will want to assess the proposal and consider commenting on it in order to make their views known to both of the boards.]