The Enduring Controversy Over Pension Accounting: Are There Current Measures Of Pension Assets And Liabilities Misleading?

Abstract

The accounting profession has long attempted to improve the disclosure of pension information.  However, even the most recent pension disclosure standard is criticized as being deficient.  The purpose of this article is to:  1) briefly explain the current reporting standard, 2) note how the standard may tend to understate pension liability and expense, and 3) illustrate one of the most controversial aspects of the standard, which allows certain obligations to be reported as both a liability and an asset.