IAS 19 Causes Balance Sheet Volatility - CFO Insight: "Changes to IFRS accounting in regards to pension obligations could lead to a much greater degree of volatility on corporate balance sheets in 2013. CFOs are adopting considerably varied strategies to address this problem."
For CFOs on both sides of the Atlantic, pension liabilities are becoming a long-term issue. New IFRS accounting regulations that come into effect on 1 January 2013, as well as pressure from investors and rating agencies, guarantee that more and more companies will have to deal with this matter. From 2013, pension provisions on IFRS balance sheets will be shown as the difference between pension obligations and pension assets. And the corridor method for measuring actuarial profits and losses, which was possible until now, will no longer be allowed. For companies, this could entail increased volatility on balance sheets and with equity.
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| On the ground: Scandinavian airline SAS is facing financial difficulties due to new IFRS accounting standards for pension obligations |
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