The Times reports today that the shortfall in company accounts now being forced into the spotlight b...
The Times reports today that the shortfall in company accounts now being forced into the spotlight by FRS17 accounting rules is more than £10bn.
The rule has created friction between the Accounting Standards Board and a coalition of politicians, companies and the Confederation of British Industry, which argue that FRS17 only provides a snapshot of pension liabilities linked to volatile equities and does not take account of the smoothing affect of holding equities over time.
The Times says this argument is unlikely to persuade the ASB to change its mind.
"There are clearly serious funding issues for some pension schemes. Pension schemes face a range of pressures at the moment. We have been calling on the Government to address the issue of red tape as a matter of urgency," The Times quotes an ASB spokesman.
"FTSE 100 companies that have admitted they face significant pension funding gaps under FRS17 include Rolls-Royce (£392 million), ICI (£453 million), AstraZeneca (£463 million), BAE Systems (£776 million), Marks & Spencer (£134 million), HSBC (£660 million) and Centrica (£117 million)."
"FTSE 250 companies to declare shortfalls include Provident Financial (£57 million), Jardine Lloyd Thompson (£50 million), and Marconi (£137 million). More are expected over the coming weeks," The Times adds.
"William Mercer, the consultant, has predicted that FRS17 will result in half the UK's top 500 companies declaring a decline in net assets as a result of pension liabilities with 50 companies likely to show a fall in assets of more than 20 per cent. Analysts fear the standard may constrain companies' ability to pay dividends."
In further accounting news, the Financial Times today quotes a New York Times piece predicting the imminent sale of Arthur Andersen.
Top bidder is Deloitte Touche Tohmatsu, and the two companies are said to have been in serious discussions since last week.
Arthur Andersen is facing criminal indictment over its shredding of documents relating to the bankruptcy of its client Enron.
Staff and clients are said to be leaving the company in droves.
Any deal involving Deloitte is likely to turn on the ability to isolate liabilities from the Enron case from the business that Deloitte ends up acquiring.
Of more direct consequence to UK investors could be further tariff barriers errected by the US.
Saying steel is not enough, one of the Bush administration's chief trade unilateralists Grand Aldonas says tariffs could spread to agriculture and semiconductors.
The stance comes as the US military over the weekend leaked a new strategy document that could see the country lob nuclear weapons into countries such as North Korea or Iraq if they used conventional weapons against South Korea or Israel respectively.
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