Continuing Unresolved Issues Of Pension Accounting

At the end of 1985, the Financial Accounting Standards Board (FASB) ended the 2nd phase of a pension reporting project that began in 1974. The legislative expansion of the employer's legal liability was the catalyst for this pension project. In its Preliminary Views, the FASB proposed that sponsors report a liability equal to the unfunded project benefit obligation. Respondents suggested alternative treatments for the debit and offered various viewpoints concerning the treatment of the pension "asset." The wide range of views will set operational parameters for the standard-setting process. Much of the controversy over the reporting of the pension obligation and related asset stems from conflicting perspectives in identifying the relevant accounting attributes of the employee group. Other significant points of concern in this area concern: 1. salary progression, 2. nonvested benefits and past service costs, and 3. the pension asset recognition issue. Clearly, there is great need for a consensus among the various opinions.