THE INTERNATIONAL ACCOUNTING STANDARD SETTING SCENE

By Paul A. Pacter, PhD, CPA, International Accounting Fellow

The Board of the International Accounting Standards Committee met in Barcelona, Spain, September 23-28. At the meeting, the board approved a revised International Accounting Standard No. 12 on income taxes along the lines of FASB Statement 109. Deferred tax liabilities would be accrued for nearly all taxable temporary differences. Deferred tax assets would be recognized for nearly all deductible temporary differences if it is probable that a tax benefit will be realized. Probability of realization would also determine accrual of unused tax losses and tax credits. Deferred tax assets and liabilities would be measured at undiscounted settlement amounts using tax rates expected at settlement.

The board also approved an Exposure Draft on employee benefits that would require recognition of all benefit costs during the employees' periods of service. Pension cost would be recognized using the projected unit credit method; projected benefit methods would not be permitted. Pension plan assets would be measured at fair value. Two alternative treatments for past service cost are identified: (1) full immediate recognition and (2) straight-line amortization over the expected remaining working lives of current employees but with immediate recognition for increases to past service cost relating to former employees. Based on comments received, the board would expect to decide on one or the other in a final standard.

The board endorsed the formation of a Standing Committee on Interpretations (SIC) to prepare interpretations of IASC standards. The SIC will have 11 voting members drawn from various countries and will include persons from the accounting profession, preparer groups, and user groups. Both the International Organization of Securities commissions and the European Community will have nonvoting observers.

The board reviewed the comment letters on two exposure drafts--those on earnings per share and segment reporting--with a view toward voting on final standards early in 1997. Among the other projects deliberated by the board were intangible assets, research and development, goodwill, agriculture, discontinuing operations, financial instruments, impairment of assets, interim financial reporting, leases, and provisions and contingencies. *