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The AAO Weblog covers accounting issues and current events as they relate the practice of investment analysis. All posts prior to September, 2007 are in the public domain, but after September 4, only subscribers to The Analyst's Accounting Observer will see all posts going forward. Only selected, occasional posts will be released to the public domain from September 4 forward.

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Let The Pension Party Roll!
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Posted by: Jack Ciesielski 3/31/2006 7:33 AM
It's here. The FASB has released its proposal for (finally) making pensions visible in corporate balance sheets. (And in non-profit organizations' balance sheets too.)

You have to give them credit for one thing: when they announced the project last fall, they said they'd get the exposure draft out for this phase in the first quarter of 2006 - and they did, on this very last day of the quarter. In FASB-time, for a project of this size, that's like running four-minute mile.

And if they get this project finished and effective for year end 2006, that would be a virtual FASB windsprint. There's no logical reason it can't happen. The standard will make profound changes on balance sheet geography, moving some unrecognized deferred items out of the footnotes and into different locales on the balance sheet. It won't change the size of benefit plans' expense; it'll just make information already produced by firms visible on the balance sheet.

And it will probably be painful for most firms with benefit plans, of both pension and health care flavors - which will probably raise corporate hackles. So, the only reason that the standard doesn't get issued and become effective at year end is if there's a corporate rope-a-dope strategy: go to Congress, allege market meltdown due to standards overkill, ask for time to study the problem, etc. Keep tuned.
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