mptions in the projection of future compensation levels for employees a particularly vexing problem.
The major argument against the use of funding payments as a basis for determining pension costs to be charged to profit and loss was that funding levels for any given reporting period are affected by a variety of external factors, in addition to accrued pension costs. The contention was that cash flow was not necessarily a valid reflection of accrued costs. 4
With respect to the incorporation of realistic assumptions in to pension accounting procedures, the central problem area involved the basis for the projection of future compensation levels for employees. Most employers opted for a conservative estimate approach, in which management relied on actuarial assumptions for long term income projections. Some members of the accounting profession argued that the conservative estimate approach did not provide realistic pension costs to profit and loss for specific reporting periods. These individuals con tended that a best
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