Are All Accounting Estimates Auditable? Some Evidence on Estimated Returns in Pension Accounting

State Pension Accounting Estimates and Strong Public Unions

Contemporary Accounting Research ◽

10.1111/1911-3846.12476 ◽

2019 ◽

Vol 36 (3) ◽

pp. 1299-1336 ◽

Cited By ~ 1

Author(s):

Samuel B. Bonsall ◽

Joseph Comprix ◽

Karl A. Muller

Keyword(s):

Pension Accounting ◽

Accounting Estimates ◽

Public Unions ◽

State Pension

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State Pension Accounting Estimates and Strong Public Unions

SSRN Electronic Journal ◽

10.2139/ssrn.3236890 ◽

2018 ◽

Author(s):

Samuel B. Bonsall ◽

Joseph Comprix ◽

Karl A. Muller

Keyword(s):

Pension Accounting ◽

Accounting Estimates ◽

Public Unions ◽

State Pension

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Managerial Miscalibration and Its Effects on the Auditability of Accounting Estimates: Evidence from Pension Accounting

The International Journal of Accounting ◽

10.1142/s1094406019500161 ◽

2019 ◽

Vol 54 (04) ◽

pp. 1950016

Author(s):

Ulrich Menzefricke ◽

Wally Smieliauskas

Keyword(s):

Financial Reporting ◽

Significant Risk ◽

Accounting Standards ◽

Financial Statements ◽

Pension Plans ◽

Expected Returns ◽

Defined Benefit ◽

Pension Accounting ◽

Accounting Estimates ◽

Short Run

In this archival study, we report three main findings related to how well pension accounting estimates of practice meet the stated objectives of professional accounting standards. Our evidence on estimated returns in pension accounting used in reporting on defined benefit pension plans in the financial statements indicates the following. First, the financial note disclosures of ranges of estimated returns are miscalibrated and provide low credibility of including either the actual or expected returns. Second, the estimated returns are unreliable estimates of the firms’ actual 10-year averages. Finally, the estimated returns can have significant risk of material misstatement arising from the uncertainty in the estimation process over the short run. The combination of these findings indicates that the estimated returns and related note disclosures on the ranges of the returns used in estimation processes may not be auditable, and may not meet the stated financial reporting objectives of professional accounting standards.

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