This contribution explains that the UK Treasury determined that the central government sector will implement FRS 17, with full effect by 31 March 2004.
The UK Government Resources and Accounts Act 2000 requires government departments to prepare accruals based accounts (known as resource accounts) in accordance with directions issued by the Treasury. The liabilities of each of the unfunded public sector employee pension schemes will be consolidated into Central Government Accounts, which will be prepared, audited and published for the first time for 2003-04. From the Treasury?s viewpoint, the two key differences between FRS17 and IAS19 are that:
- IAS19 currently allows actuarial gains or losses to be smoothed over the remaining working lives of participating employees, although, at a minimum, a net gain or loss in excess of 10 per cent of the greater of defined benefit liabilities or fair value of the scheme assets at the beginning of the financial year should be recognized in the statement of financial performance. Under FRS17, the actuarial gain or loss should be recognized immediately in full in the Statement of Total Recognised Gains and Losses; and
- IAS19 allows the employer to limit the level of the asset or liability shown on the balance sheet by reference to a calculation based on actuarial losses, past service costs and available funds. FRS17 provides for no such limit.
David Watkins - Her Majesty's Treasury, UK
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