The Financial Accounting Standards Board issued a proposal that would require employers to recognize over funded or under funded defined benefit postretirement plans, including pension plans, in their balance sheets. The proposal would also require that employers measure plan assets and obligations as of the date of their financial statements.

The draft is the first phase of a project reconsider guidance in statement No. 87, "Employers' Accounting for Pensions," and statement No. 106, "Employers' Accounting for Postretirement Benefits other than Pensions." A second, broader phase will involve the International Accounting Standards Board and address remaining issues.

"Many constituents -- including our advisory councils, investors, creditors and the Securities and Exchange Commission staff -- believe that the current incomplete accounting makes it difficult to assess an employer's financial position and its ability to carry out the obligations of its plans," said FASB member George Batavick, in a statement.

For public companies, the proposed changes would be effective for fiscal years ending after Dec. 15, 2006. Written comments on the proposal are due by May 31 and the board will hold at least one public roundtable meetings on June 27 at its Norwalk, Conn. headquarters.

The draft is available at Comments can be submitted via e-mail to

Separately, the International Public Sector Accounting Standards Board of the International Federation of Accountants has released a white paper detailing the United States' transition to accrual accounting, "The Road to Accrual Accounting in the United States of America."

The challenges for entities moving to the accrual basis include both development and implementation issues. They also include the establishment of appropriate institutional arrangements and mechanisms to promote, manage and assist in the transition.

David Bean, director of research and technical activities at the Governmental Accounting Standards Board, prepared the paper. It is available for free download at

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