Ind as 19
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This document discusses the key requirements of Ind AS 19 on employee benefits. It covers the accounting for short-term employee benefits such as compensated absences, profit sharing and bonus plans. For post-employment benefits, it discusses the treatment for defined contribution plans which are expensed as incurred, and defined benefit plans which require actuarial valuation using the projected unit credit method. The document also discusses other long term benefits and termination benefits. Key disclosure requirements under Ind AS 19 are provided.
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Ind as 19
- 1. Ind AS 19 Employee Benefits
- 3. Definition Expected to be settled wholly before 12 months afterthe end of the annual reporting period of the employee rendering the relatedservice Recognition a liability when an employee has provided service in exchange for employee benefits to be paid in the future and an expense when the entity consumes the economic benefit arising from service provided by an employee in exchange for employee benefits Disclosure No Specific Disclosure Short Term Employee Benefits
- 4. Short Term Employee Benefits Short term compensated leave absences accumulated Vested Recognize actual amount as expense Unvested Expectedcost theenterprise expectsto payasaresult of theunusedentitlementthat has accumulatedatthebalance sheet date. Non-accumulating No treatment required
- 5. Profit-sharing and bonus plans Recognize expected cost when •the entity has a present legal obligation to make such payments as a result of past events; and •a reliable estimate of the obligation can be made. A present obligation exists when, and only when, the entity has no realistic alternative but to make the payments. Short Term Employee Benefits
- 6. POST-EMPLOYMENT BENEFITS /OTHER LONG TERM BENIFIT POST- EMPLOYMENT BENEFITS Defined Contribution Plans Account for as incurred Defined Benefit Plans Project unit credit method Other long term benefit
- 7. payable after the completion of employment. employer makes the certain amount of the contribution every month or in some definite period. The risk and reward incidental to return is borne by the employee. As there is no risk over and above the definite contribution because the entity’s legal or constructive obligation is limited to the amount that it agrees to contribute to the fund the contribution should be recognized as expense. No question of discountiing. POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS
- 8. POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS Employer Pension fund Administrator Asset and liabilityRetired Employee Contribution Manage Benefit Payment
- 9. POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS Other Than Post-employment-defined contribution plans The risk and reward incidental to return is borne by the employee. Actuarial assumption is required Should be discounted using project unit credit method.
- 10. POST-EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION PLANS Calculate the expected benefit payable to employee Calculate allocated benefit each year Calculate present value of allocated benefit Calculate interest on liability Record expenses
- 11. Termination Benefits payable as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date an employee’s decision to accept voluntary redundancy in exchange for those benefits.
- 12. Termination Benefits • Long term-Discounted • Short term – As it is Measurement • No specific DisclosureDisclosure Voluntary retirement plan – measure on the expected no of employee to avail the option,
- 13. Disclosures under Ind AS 19 Information on characteristics Nature of benefits Expense recognition policy Description of any other entity’s responsibilities e.g. trustees Information on events Curtailments Amendments Settlements Detailed reconciliation of DBO and Plan Assets Asset classification Actuarial assumptions
- 14. Key Difference IND AS-19 and AS-15 AS 15 Ind AS 19 Recognition of Actuarial Gains and Losses In P & L In Other Comprehensive Income Past Service Cost Recognized in P&L over the period of vesting Recognized immediately in P&L Information of Future Cash Flows Not required , except next year contribution i. Description of funding arrangements and policy that affect future contributions ii. Maturity profile of DBO e.g. weighted average duration