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Impact of New CICA Accounting Rules for Pension Plans and Other Post-employment Benefits
Proposed changes to Section 3461 of the Canadian Institute of Chartered Accountants’ Handbook would require the full recognition of an employee future benefit plan’s funded status on the plan sponsor’s balance sheet. For most plan sponsors, the initial effect of the changes would be an increase in liabilities (or a decrease in assets) with a corresponding reduction in shareholders’ equity. According to the Pension Risk survey carried out in early 2007 by Watson Wyatt and The Conference Board of Canada, 15 percent of CFOs of publicly traded companies are very concerned about the impact of these new rules on their share price. And it’s no wonder why.
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