Pension Pangs
Forbes (06/09/03) Vol. 171, No. 12 p.5B; MacDonald, Elizabeth

Some large companies have been inflating earnings by making unsupported assumptions about their pension fund returns, this article says. Pension accounting is complicated, and Financial Accounting Standards Board Chairman Robert Herz wants to stop the accounting practice that lets companies inflate profits by using overly optimistic expected return rates on pension assets, which would mean big changes in corporate bottom lines. Credit Suisse First Boston accounting analyst David Zion says that companies reporting only what their pensions earned in 2001 would have reduced collective Standard & Poor's 500 income from continuing operations from $219 billion to $68 billion for 2001.

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