Indian Accounting Standards 19 Employee Benefits

Indian Accounting Standards 19 Employee Benefits

Ind AS19 Employee Benefits – A Closer Look

By Hemanshu Jain*

New Indian accounting standards (Ind AS) were published last year and have come into force in a phased manner with respect to accounting years starting 1st April 2016. The new standard have converged with International Accounting Standard IFRS, with certain carve outs. In first year of adoption, companies need to provide comparative figures for the previous year.

Companies offering defined benefit schemes like gratuity, pension, and leave etc. to its employees would need to do provisioning & prepare disclosures in accordance with new standard schedule Ind AS19. This article focuses on Ind AS19 employee benefits, & discusses its proposed changes in disclosure & effect of these changes on companies.

Under Ind AS19 employee benefits we see lot of similarities with AS15R: 

  • Company’s obligation towards scheme continues to be measured with projected unit credit (PUC) method
  • Assets will continue to be measured on fair market value
  • Same employee data requirements
  • Assumptions to be used for actuarial valuation and their basis of selection have largely remained same as AS15R 

Thus companies will likely to see no change in their net liability towards schemes, unless they decide to bring a change in assumption, scheme rules or employee data between the two standards. Difference in net liability position at beginning of year in transition year will be transferred to reserve account.

However the standard Ind AS19 does bring some key changes in reporting that may impact company profit & loss statement, reserves, amount of disclosures associated with the management of scheme. To understand each of these changes in detail download the article now.

Hemanshu is a Fellow Actuary and Senior Consultant with Mercer Retirement Business in India. 

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