Site menu:

Site search

Get Updates

Enter your email address to hear about new posts. (You can view my privacy policy here.)


RSS Recent Posts

Archives (month)


Shoot the messenger!

Financial accounts are supposed to enable readers to understand the financial position of the entity under review. But, yesterday, the National Association of Pension Funds published a report attacking the notion that accounts provide neutral and reliable information about an employer’s pension scheme liabilities. The critique, written for the NAPF by Dr Iain Clacher and Professor Peter Moizer of Leeds University Business School, is pretty damning of the standard setters.

The report goes beyond a technical critique of the accounting and financial issues. It argues that accounting has been influenced by politics, but lacks a democratic mandate.

The report also exposes how financial presentations demanded by the current accounting regime have negative economic consequences at both the micro- and macro-economic levels: changing the demand for bonds, driving up the price and thereby increasing pension schemes’ liabilities in a vicious cycle as asset purchases try to keep pace with accounting measures.

This debate has been running for a long time – some of the ideas discussed in the report can be found in previous blogs and articles available on this website – and many of those involved have developed a world-weary approach to it all. The NAPF Chairman, Lindsay Tomlinson, told the Independent on the day the report was published: “After the event I’m going to be proved right but we are not going to win this argument.”

I fear that he’s right on both counts.

Sign up for updates by Email, Twitter or RSS Feed.

Related articles on this website
Lindsay Tomlinson is calling for a summit to change the way pension costs are calculated in company accounts. As chairman of the National Association of Pension Funds, Tomlinson would say ...
Read the complete article
I think the three words at the end of the following sentence must be the most chilling – and the most heart-warming – I have ever read from an accounting ...
Read the complete article
Tax avoidance has become a hot topic. The Times newspaper has recently unmasked a scheme in which income tax is avoided by the ludicrously simple means of saying the salary ...
Read the complete article
Regular readers of this blog must be sick to death by now of me repeating how much damage accounting standards are doing to pension schemes (here, here, here and, even ...
Read the complete article
I took the morning off to watch Andy Murray’s semi-final in Australia before heading to the Centre for the Study of Financial Innovation for a discussion on risk modelling. Intriguingly, ...
Read the complete article
I had always thought that employee contributions into a pension scheme were a mistaken idea. Should I be re-thinking that in the light of Hutton’s report out today? Or should ...
Read the complete article
… to be giving a presentation whilst the audience is tweeting their comments onto a screen behind your head. Perhaps that’s going to be the way of the future. For me, ...
Read the complete article
When the Thatcher government privatised British Telecom in the 1980s, they created a regulator to cap prices. They did the same with the privatisation of water, electricity and gas. No ...
Read the complete article
Time to start thinking again, I think
Accountants becoming effective?
You mean we’re NOT supposed to avoid tax?
Accountants in a tangle with Webb
Game, Stress & Match
The Hutton Contribution
It’s very disconcerting …
Marx out of ten for the attack on price caps?