Finance Directors of charities not disclosing their multi-employer pension liabilities on their balance sheet may be sleeping just a little uncomfortably at the moment following a consultation document issued by the Financial Reporting Council. If the proposals are accepted charities will need to recognise any agreement to fund a deficit in a multi-employer scheme on their balance sheet. The proposal would end the inconsistency where some organisations choose to disclose their DB liabilities in full while others in the same or similar schemes chose to disclose as a DC scheme using the exemption which applies if they feel they cannot “identify their assets and liabilities on a consistent and reasonable basis.” It would also end the scenario where an organisation discloses for one scheme but not another. Whilst another article has sought to clarify the mechanics of the current position I can’t help feeling that this has somehow missed the point and isn’t asking the key question, namely without disclosing is the organisation providing a true and fair representation of it’s financial position? Surely if there is a defined benefit scheme in place and the organisation is funding that deficit the only real answer to this question must be no. It makes a mockery of the current approach that two organisations with identical benefits and deficit should be able to adopt such a polar approach. Whilst FRS17/IAS19 are far from perfect they do at least both ensure that what can often be a material liability is recognised and people can make a fair assessment of its potential impact. I also find it difficult to accept the contention that many employers feel they cannot identify their position on a reasonable basis as highlighted by the numerous employers who do disclose. If we take the local government pension scheme for example these schemes have established a sophisticated and cost effective mechanism to provide the figures and yet some participants chose not to avail themselves of the information. By not doing so do they have something to hide? Would a donor, funder or bank feel misled if they subsequently discover the information was omitted? How would they feel, or act, should an organisation become insolvent? The guidance gives organisations the option to include the information even if it wouldn’t compel them to do so and many have done so while others have gone to great lengths not to. The proposals in the exposure draft FRS102 will prevent organisations from hiding behind the exemption. Even though at this stage we don’t know what discount rate would be used it’s likely that the figures which would be disclosed on a net present value basis based on the deficit contributions would produce a higher level of deficit than would be the case on an FRS17 / IAS19 disclosure basis which could encourage more organisations to move to producing figures based upon the latter approach. For organisations not already disclosing this move could be very material as assuming a £100,000 per annum deficit contribution over 15 years using a discount rate of 5.0% this could negatively affect the balance sheet by £1m and in some cases could result in an overall negative balance sheet for the organisation. The proposed change would produce welcome consistency and transparency amongst organisations participating in these schemes although it will undoubtedly be very painful for some to implement.