1. CIA Annual Meeting Assemblée annuelle de l’ICA
June 29 & 30, 2006 Ÿ Les 29 et 30 juin 2006
Ottawa, Ontario

2. Pension Accounting- Convergence and IFRS
CIA Annual Meeting Ÿ Assemblée annuelle de l’ICA
Pension Accounting- Convergence and IFRS
Paul G. Cherry, FCA Chair Accounting Standards Board
Although the discussion is in context of pension plans, similar issues relate to OTHER POST-EMPLOYMENT BENEFITS. OPEBs are typically pay-as-you plans, ie unfunded

3. Current Status: global convergence on a flawed standard?
CIA Annual Meeting Ÿ Assemblée annuelle de l’ICA
Current Status: global convergence on a flawed standard?
Basic model is same
Extensive “smoothing”
Extensive use of assumptions
Delayed recognition of gains/losses
Corridor approach
Economic losses often reported as accounting assets
Most important information often buried in footnotes

4. FASB Phase I: Worth the Effort?
AcSB has already bolstered pension footnote disclosure
Impact on debt/equity ratios, debt covenants, etc
“Standards overload”
Any change entails certain costs
Potential adverse impact on other projects

5. Phase II Risk of “duelling projects”?
FASB Phase II
IASB comprehensive project
This seems contrary to working agreement between FASB/IASB

6. CIA Annual Meeting Ÿ Assemblée annuelle de l’ICA
Some Canadian Circumstances
Regulatory and accounting rules differ for actuarial valuations
Uncertainties about ownership of surpluses
Frequency of actuarial valuations
CRA rules
Will greater accounting transparency cause shift to defined contributions plans?

7. AcSB Strategic Direction
IFRS will be basis of reporting for public companies
Transition plan
Transition period approximately 5 years
Implementation plan: available June 30
Avoid new/revised standards during transition that conflict with IFRS

8. What Should AcSB Do? Follow FASB Phase I? Adopt IAS 19 “free choice”?
Would create conflicts with IAS 19
IASB gives free choice
IASB choice also affects net income
Adopt IAS 19 “free choice”?
Wait for completion of IASB comprehensive project?
coincides with targeted crossover to IFRS