Many senior finance executives fear that the Financial Accounting Standards Board’s plan for overhauling pension accounting will place an onerous crunch on year-end closes that have already grown frantic.

FASB’s plan to provide clearer and fuller accounting of pensions and other postretirement benefits has provoked an uproar by including a provision that would require employers to gauge the assets and obligations of their defined-benefit plans as of the date of the companies’ balance sheets. Currently, they can use measurements taken up to three months before the companies’ fiscal year ends.

Tying the measurement of pension balances to the end of the annual reporting period will toss another deadline into a mix that has become frenetic in the wake of narrowed closing periods, executives said in letters commenting on FASB’s proposal for the first of two phases of its pension reporting project. “A requirement to use a year-end measurement date will severely strain and possibly compromise the current closing schedules and financial reporting process,” wrote Richard Levy, senior vice president and controller of Wells Fargo & Company on May 31, the closing date for written comments on the proposal.

To judge by many of the 112 letters that have reached FASB’s website regarding the board’s proposal to revise the accounting of pension and other retiree benefits, it will meet a strong opposition from senior management of many organizations.

The plan is the first phase of the board’s two-part plan to overhaul retiree benefits accounting to make it more transparent and complete. Among other provisions, it would ask pension sponsors to put the economic status — how much the plan is overfunded or underfunded — on the balance sheet. Up until now, that status has appeared in footnotes to financial statements. A second, broader phase will attack such issues as the corporate practice of averaging out pension values over time — known as “smoothing” — rather then calculating them at fair value.

One of the major objections to Phase I is that it would require companies to use assumptions about future pay levels in calculating balance-sheet liabilities — and possibly inflate those liabilities. Further, a large number of respondents dislike the fast-approaching compliance deadlines: most of the proposal would be effective for fiscal years ending after December 15.

But the commentators were most anxious about the prospect of having to cram the measurement of final retirement plan balances into an already packed schedule. It would be too much, they think, now that their companies must issue 10-Ks within 60 days of the close of a fiscal year as well as having to report on the effectiveness of internal controls. “For large companies with numerous postretirement benefit plans, a reasonable amount of time after the measurement date needs to be provided to allow for the collection of plan data and preparation of required general ledger entries and financial statement disclosures,” argues Wells Fargo’s Levy.

The altered date could also upend the way companies budget. “Changing the measurement date to coincide with a company’s year end may require companies to either revise their budgeting process or cope with recurring budgeting variances in this area,” he said.

The date change could also increase compliance expense by boosting the demand for actuaries and other benefit services providers, some think. The “overall costs would increase since companies would be competing for the limited resources of service providers in gathering this information in a relatively short period of time,” wrote Loretta Cangialosi, a vice president and controller at Pfizer.

Some financial executives are calling on FASB to push back the effective date of the standard to help them adjust to the measurement-date change. “If the current exposure draft is adopted, the new measurement date requirements could put added pressure on [pension and benefit-plan] trustees, actuaries and company sponsors to obtain the required information in a timely manner,” said Charles Cooley, CFO of The Lubrizol Corporation. “This could add days, if not weeks, to the closing process if the required information is not available and could push back earnings releases and filings.”

Cooley’s solution? FASB should either issue its final standard earlier than its expected release in September to give companies more lead time, or delay the effective date to years ending after December 15, 2007.

Another point of contention is the way FASB proposes to measure the pension number it wants companies to put on their balance sheet. The board wants plan sponsors to gauge the underfunded or overfunded status of their plans by calculating the difference of the fair value of plan assets and the “projected benefit obligation.” Actuaries measure the PBO, which is the present value of all pension benefits earned by employees as of a certain date, by using assumptions about future pay raises and career lengths.

The opponents of FASB’s proposed formula object to the use of the PBO measurement because it’s based on salary increases that aren’t present obligations. “Most companies do not guarantee future salary increases or future years of employment,” wrote Cooley. If the PBO were used, he added, “we would be overstating our liability balance by including future obligations that have not been earned or granted at the balance sheet date.”

Next on tap: FASB plans to host one or more roundtable meetings on the proposal on June 27.