097 Accounting for the loss of pension assets
March 22, 2012, Japanese Institute of Certified Public Accountants has announced the “Handling on the audit on the accounting treatment relating to the loss of pension assets.”
Accounting treatment for the loss of pension assets, relating to the pension funds of which asset management is delegated to the investment advisory company recently reported in some newspaper as suspected fraud.
It is almost certain that the company, whose operation has been suspended by the Financial Services Agency, has lost the majority of the pension assets. Therefore, the fact of the loss of the pension assets should be taken into account in the financial statements for the fiscal year during which incident occurred.
Specifically, the amount of loss should be reasonably estimated, and the amount should be accounted for “reserve for retirement benefits” and “retirement benefit expenses” as a extraordinary loss.
In addition, the companies that adopts the accounting treatment instructed by the “Note 12 to the accounting standards for the retirement benefits” are required to recognize the amount of the necessary contribution to the pension funds as “retirement benefit expenses” and make an certain explanatory note in the financial statements.
In case that the impact to the contribution to the pension funds expected in the future is material to the certain level, they will have to make a supplementary comment in the financial statements about the summary of the event and the impact to the contribution to the pension funds in the future.
