ROUNDTABLE OPPOSES FASB'S PROPOSED DRASTIC CHANGES IN PENSION ACCOUNTING RULES A company's earnings, borrowing capacity, cash management and labor relations could be dramatically and adversely affected by proposals of the Financial Accounting Standards Board (FASB) with respect to accounting for pensions and other postemployment benefits. On the basis of that conclusion, reached by its Accounting Principles Task Force, the Roundtable is strongly opposing the proposals and urging its member companies to do the same. Roger B. Smith, Chief Executive Officer of General Motors and Chairman of the Task Force, expressed the Roundtable arguments against the proposals in a detailed letter to FASB. "In view of the acknowledged complexities and subtleties of the accounting for pensions and other postemployment benefits, we were both surprised and dismayed," he wrote, "to note the revolutionary changes suggested... We see no justification in scrapping this (current) process in favor of a technique that would measure cost as the difference between two ill-defined liabilities...We believe the Board should have approached this from the standpoint of improved disclosure rather than make radical changes in basic financial statements." Issues involved in the proposals center around the Board's expressed view that pension costs should be attributed to periods during which employee services were rendered and that costs attributed to prior services should be recognized as a liability. The Roundtable's basic conclusion, simply put, is that the cost of a pension plan -- and amendments to it measured by prior service -- should be allocated on a systematic and rational basis to the current and future periods benefitted by the ongoing work force. A pension liability should be recognized on the employer's balance sheet only to the extent that allocated pension costs are not paid or funded. The Task Force's letter of comment urges that the FASB proceed more cautiously before making any radical changes to employers' accounting for pensions and other postemployment benefits: "The private American pension system has functioned quite well and is very sound. The proposals represent a step backward in the area of fair. financial reporting as they would tend to confuse rather than enlighten the reader." NEW BOOK PROPOSES CHANGES TO IMPROVE RESULTS OF PRESIDENTIAL APPOINTMENT PROCESS The problems and controversies that have surrounded the recruitment of personnel to serve in Cabinet and sub-Cabinet level jobs in the Federal Government are a familiar part of recent history. Personnel recruiters for President Reagan and for some former presidents as well -- have asserted that many of their best prospects were discouraged from accepting government appointments because of the legal hurdles and financial and career sacrifices involved. -1 In order to address these problems, The Business Roundtable Employee Relations Committee, chaired by Frank P. Doyle, Senior Vice President, General Electric Company, provided a grant for a study of the Presidential appointments process. The study was conducted by the National Institute of Public Affairs, an affiliate of the National Academy of Public Administration. The Academy is a bipartisan group of public administration experts and former public servants. Results of the study have now been published in a book entitled America's Unelected Government: Appointing the President's Team. The authors are John W. Macy, Bruce Adams, and J. Jackson Walter, who have had extensive experience in government, the private sector and academia. G. Calvin MacKenzie, who has written widely on the Federal executive branch's personnel problems, was a consultant on the project. - - The book is based on the fact that the leadership positions in the Federal Government cabinet and sub-cabinet jobs are filled by executives, lawyers, professors, and financiers who move between government and the private sector. It concentrates on how they are chosen, recruited, appointed and confirmed. One of the points it makes is that the two-way transition between the public and private sectors should be facilitated. "There are too many interests, passions and considerations involved in choosing a cabinet for it to be a genteel endeavor," the authors write. "But it is the President's responsibility to appoint men and women whose competence, integrity, creativity and political sensitivity will serve their nation well. When too many appointees fail their Presidents, as they have recently, it becomes necessary to carefully assess and improve the underlying system. The authors develop an historical perspective on the appointment process, especially during the past 25 years; enumerate some of the factors that deter qualified individuals from Government service; and prescribe a set of recommendations that, while not calling for sweeping reform, would result in what they project as substantial incremental improvement. The study shows that among the contemporary deterrents to effective and timely functioning of the process are such factors as: - Antigovernment campaign rhetoric that discourages qualified -- A circuslike quality in media coverage of post-election appointments that trivializes the important issues that are at stake. -- Private-sector unwillingness to encourage and facilitate temporary Government services by executives and other employees. Absence of a system to indoctrinate appointees adequately into -- A system that seems to require a wasteful and embarassing "reinvention of the wheel" after each election. Among matters facing appointees are compensation, conflict-of-interest precautions, the transition from private to public service and the shift back to the private sector. The authors conclude that much can be done to improve the appointment process and "ensure a steady flow of talent into the highest levels of Government. |