The Accounting Standards Board today announced plans to 'stamp out accountancy abuse' in the treatment of pensions, as revealed by Accountancy Age in August. Launching an exposure draft for retirement benefits, ASB chairman Sir David Tweedie, told Accountancy Age that the ASB wants to force companies to move away from the use of actuarial values for assets in a pension scheme to a market-value based approach. The draft accounting standard, FRED20, falls in line with the increasing use of market values by the actuarial profession in the UK. It also marks a move towards the practice used internationally in countries such as the US. 'SSAP24 has lost all credibility,' said Tweedie. 'We are replacing it with an approach that is consistent with international standards in the measurement of the pension scheme surplus or deficit. 'The standard will be published next summer and will stamp out accountancy abuse.' SSAP24 has also come under fire for failing to achieve its objective of forcing companies to come clean on pension funds. The ASB has reassured companies the move towards market values will not bring volatility into the measurement of the surplus and deficit in the pension scheme. 'We have developed an alternative approach to cope with volatility. The effects of the fluctuations in market values will not be part of the operating results of the business and are treated in the same way as revaluations of fixed assets, i.e. are recognised in the second performance statement,' added Tweedie. FRED20 will replace SSAP24 'accounting for pension costs' and UITF abstract 6 'accounting for post retirement benefits other than pensions'.
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