This document discusses accounting standards for retirement benefits in financial statements. It outlines different types of retirement benefits including provident funds, superannuation/pension benefits, and gratuity. For superannuation/pension benefits, it describes defined contribution and defined benefit schemes. It states that the cost of retirement benefits should be accounted for during the period the employee renders services, rather than when they leave on a cash basis.

1. ACCOUNTING STANDARD-15 ACCOUNTING FOR RETIREMENT BENEFITS IN THE FINANCIAL STATEMENTS OF EMPLOYERS.

2. PURPOSE This statement deals with the accounting treatment of the cost of the retirement benefits in the financial statements of employers.

3. TYPES OF RETIREMENT BENIFITS Provident fund : It involves contribution of both employer & employee to PF administered by the central government or to a separate trust created.

4. TYPES OF RETIREMENT BENIFITS Superannuation/pension benefit : Defined contribution scheme: The employer makes a contribution once a year. The accumulated balance of contributions and interest is used to pay the retirement benefits to the employee. The benefit available under this scheme has no relationship with the final salary or the no. of years of service put in by an employee. The benefit solely depends upon the annual contribution made by the employer. Defined benefit scheme :the benefit payable to the employee is determined with reference to factors such as: Percentage of final salary. Number of years of service. The grade of the employee. The contribution is generally expressed as a percentage of salary for the entire group of employees covered by the scheme.

5. Gratuity: Gratuity benefit is in the nature of a defined benefit scheme wherein payments are made by the employer as and when the employee leaves . However, trust funds can also be created or arrangement with insures can be made so that computed annual contributions can be made every year. TYPES OF RETIREMENT BENIFITS

6. ACCOUNTING TREATMENT The cost of retirement benefits should be accounted for in the period during which the employee renders services. Thus, accounting for retirement benefit cost when the employee leaves, i.e. on cash basis, is not appropriate .