Acounting Question

[DVK916]

Ok a company hires an Actuary to calculate its future Pension funding, and obligation. I.E how much money they expect to come into the pension plan, and how much they expect to be paid out, over x number of years.

Now why don't companies have to report the estamate given by the actuary.


Similarly an insurance company hires actuaries to calculate its future obligation and funding, yet this important information needs not be reported.


Just wondering why.

 

[DVK916]

I know we have some CPAs on this board.

 

[DVK916]

Where are the accountants. Why don't companies have to report liabilities calculated by an Actuary.

 

[Zenmervolt]

Because it's not the law.

ZV

 

[ChiBOY83]

HA...this is a very funny question. I was an accounting major until my senior year, and the reason why i dropped out was because the chapter on accounting for pensions kicked my ASS..... Basically, the SEC does not require public companies to disclose the entire amount because it just an estimate (for pension plans that are defined benefit plans). However, there is a fair amount of info regarding pension expenses and laibilities in the 10-k's, however, you have to be VERY very familiar w/ reading them, or a damned CPA to be able to understand what it all means.... hopefully someone will come in and give you a more detialed answer, but basically the SEC does not require it, so no point putting all the info in




EDIT: I'd open my old book that covered pensions in detail, but im currently using it to prop up my 19 inch CRT (and its heavy to lift) 😀

 

[DVK916]

Originally posted by: ChiBOY83
HA...this is a very funny question. I was an accounting major until my senior year, and the reason why i dropped out was because the chapter on accounting for pensions kicked my ASS..... Basically, the SEC does not require public companies to disclose the entire amount because it just an estimate (for pension plans that are defined benefit plans). However, there is a fair amount of info regarding pension expenses and laibilities in the 10-k's, however, you have to be VERY very familiar w/ reading them, or a damned CPA to be able to understand what it all means.... hopefully someone will come in and give you a more detialed answer, but basically the SEC does not require it, so no point putting all the info in




EDIT: I'd open my old book that covered pensions in detail, but im currently using it to prop up my 19 inch CRT (and its heavy to lift) 😀

What about insurance companies, wouldn't someone want to know what the actuary department is predicting in terms of revenue and liabilities.

 

[Conky]

I'm a professional accountant(among my other trades, lol) and actuarial estimations are just that, estimations.

Their crystal ball predictions are based on many variables that are just that.. variable. Actuarial science is like weather prediction.

Bottom line, the weatherman can't tell me tomorrow's temp with anymore certainty than an actuary can tell me my exact moment of death. It's all guesswork. 😛

 

[ActuaryTm]

Because most actuaries don't readily have access to the crayons, construction paper, felt, and glitter glue required to produce documentation accountants are able comprehend.

 

[Conky]

Originally posted by: ActuaryTm
Because most actuaries don't readily have access to the crayons, construction paper, felt, and glitter glue required to produce documentation accountants are able comprehend.

Accountants would like a peek in that crystal ball too. 😉 You can't tell what interest rates and economies will do over time and if you do you should be a day trader worth billions and not an actuary. 😛

I appreciate actuaries but they are about as accurate as the local weatherman. :laugh:

 

[ActuaryTm]

Originally posted by: Crazyfool
I appreciate actuaries but they are about as accurate as the local weatherman. :laugh:

Speaking of accuracy, unfortunately the above analogy is about as accurate as comparing a mechanic to a prostitute (as at the conclusion of a transaction with either, the patron feels as though he/she was fvcked).

I adore you accountants, however.

 

[Conky]

Originally posted by: ActuaryTm

Originally posted by: Crazyfool
I appreciate actuaries but they are about as accurate as the local weatherman. :laugh:

Speaking of accuracy, unfortunately the above analogy is about as accurate as comparing a mechanic to a prostitute (as at the conclusion of a transaction with either, the patron feels as though he/she was fvcked).

I adore you accountants, however.

My local weatherman would like to kick your butt but you probably could've predicted this. 😉

Here's the thing about actuaries and let's talk about insurance companies as an example... Good ones make the company a ton of money if they are lucky. Bad(unlucky) ones can bankrupt that same company. Telling the difference between a good one and a bad one is like flipping a coin. How can an actuary factor in stuff like hurricanes?

Trying to predict stuff is fun, it's called gambling... it's even better if you can convince people there is a such a complicated science behind it that a CPA who can decipher tons of governmental gibberish can't understand simple things like a coin toss. 😛

:beer: