accounting standard 15 revised
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8/17/2019 Accounting Standard 15 Revised
1/28
K K Mankeshwar & Co.
Chartered Accountants
CLIENT ___________________________________________ YEAR ENDED______________
AS 15 - EMPLOYEE BENEFITS CHECKLIST
Yes N
o
Qualify? Sch
no :
Ref
1. Applicability:
1.1 Are the equity or debt securities of theenterprise listed on any stock exchange in or
outside India?
1.2 Has the enterprise passed a BoardResolution to get its equity or debtsecurities listed on any stockexchange in or outside India?
1.3 Is it a commercial, industrial or business
enterprise haing a turnoer !excluding other income" in excess of #s $% crores for the
immediately preceding reporting period onthe basis of the audited financial statements?
1.& Is it a bank !including co'operatie bank",financial institution or an insurance
company?
1.$ Is it a commercial, industrial or business
enterprise haing borro(ings, including
public deposits, exceeding #s. 1%crores at any time during the reporting
period?1.) Is the enterprise, a holding or subsidiary of
any of the aboe entities?
1.* If t! a"#$!% t& a"y &f t! ab&'! i# i" t!
affi%(ati'!) t! Sta"*a%* $&+l* apply i"
!"ti%!ty.
1.+ Is an enterprise not coered by 1.1 to 1.) as
enumerated aboe a"* t! a'!%a,!"+(b!% &f p!%#&"# !(pl&y!* *+%i",
t! y!a% i# 5 &% (&%!
1. If the ans(er to 1.+ aboe is in the
affirmatie, the -tandard (ould apply,i" it# !"ti%!ty !/c!pt f&% t!
f&ll&$i",:
a. aragraphs 11 to 1) of the -tandard to the
extent they deal (ith the recognition and
measurement principles of #&%t-t!%(
acc+(+lati", c&(p!"#at!* ab#!"c!# $ic
a%! "&"-'!#ti",.
1
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K K Mankeshwar & Co.
Chartered Accountants
Yes N
o
Qualify? Sch
no :
Ref
b. aragraphs &) and 13 of the -tandard (hichdeal (ith the *i#c&+"ti", &f a(&+"t# $icfall *+! (&%! ta" 10 (&"t# aft!% t!
Bala"c! S!!t *at!.
c. /he recognition and measurement principles
laid do(n in paragraphs $% to 11) and the presentation and disclosure requirements laid
do(n in paragraphs 11* to 123 of the
-tandard in respect of accounting for defined
benefit plans, except as indicated hereunder.
d. /he recognition and measurement principles
laid do(n in paragraphs 12 to 131 of the-tandard in respect of accounting for other
long'term employee benefits, except as
indicated hereunder0
For the purpose of para 1.9.c and 1.9.d
above, the accrued liability in respect of
defined benefit plans and other lon!ter"
e"ployee benefits should be actuarially
deter"ined and provided for as follo#s:
• $he %ro&ected 'nit (redit )ethod is
used for actuarial valuation and
• $he discount rate used is deter"ined
by reference to "ar*et yields at the
+alance Sheet date on overn"ent bonds.
1.1 Is an enterprise not coered by 1.1 to 1.) asenumerated aboe a"* t! a'!%a,!
"+(b!% &f p!%#&"# !(pl&y!* *+%i",
t! y!a% i# l!## ta" 5
1.11 If the ans(er to 1.1% aboe is in the
affirmatie, the -tandard (ould apply,
i" it# !"ti%!ty !/c!pt f&% t!
f&ll&$i",:
a. aragraphs 11 to 1) of the -tandard to the
extent they deal (ith the recognition andmeasurement principles of #&%t-t!%(acc+(+lati", c&(p!"#at!* ab#!"c!# $ic
a%! "&"-'!#ti",.
b. aragraphs &) and 13 of the -tandard (hichdeal (ith the *i#c&+"ti", &f a(&+"t# tat
fall *+! (&%! ta" 10 (&"t# aft!% t!
Bala"c! S!!t *at!.
2
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8/17/2019 Accounting Standard 15 Revised
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K K Mankeshwar & Co.
Chartered Accountants
Yes N
o
Qualify? Sch
no :
Ref
c. /he recognition and measurement principleslaid do(n in paragraphs $% to 11) and the
presentation and disclosure requirements laid
do(n in paragraphs 11* to 123 of the-tandard in respect of accounting for defined
benefit plans, except as indicated hereunder.
d. /he recognition and measurement principles
laid do(n in paragraphs 12 to 131 of the
-tandard in respect of accounting for other
long'term employee benefits, except asindicated hereunder.
For the purpose of para 1.11c and 1.11d
above, the accrued liability in respect
of defined benefit plans and other
lon!ter" e"ployee benefits should be
calculated and accounted by reference
to so"e other rational "ethod.
1.10 If an enterprise subsequently ceases to be
coered by paras 1.1 to 1.) earlier, for
t$& c&"#!c+ti'! y!a%#, only then the
exemptions aailable in para 1. (ouldapply.
1.13 If an enterprise subsequently qualifies for exemptions coered by para 1.11
aboe, for t$& c&"#!c+ti'! y!a%#, only
then the exemptions aailable in para1.11 (ould apply.
1.1& If an enterprise subsequently ceases to bequalified for exemptions coered by
paras 1. and 1.11 aboe in the current
accounting period, then the Sta"*a%*
appli!# i" it# !"ti%!ty !/c!pt
!/!(pti&"# c&'!%!* by 1. a# t! ca#!
(ay b! f%&( t! c+%%!"t p!%i&*.
T! c&%%!#p&"*i", p%!'i&+# p!%i&* fi,+%!#
i" %!#p!ct &f t! %!l!'a"t *i#cl+%!#
"!!* "&t b! p%&'i*!*.
1.1$ here exemptions hae been aailed as
coered by paras 1. and 1.11 aboe,
the fact must be disclosed.
In case of exemptions coered by para 1.11,the method used to calculate and account for
accrued liability must be disclosed.
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Chartered Accountants
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Qualify? Sch
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0 Sc&p!
2.1 oes the nterprise proide mployee
4enefits under any of the follo(ing0• 5ormal plans or other formal
agreements bet(een an enterprise andindiidual employees, groups of
employees or their representaties.
• 6egislatie requirements, or through
industry arrangements, (hereby
enterprises are required to contributeto state, industry or other multi'
employer plans.
• Informal practices that gie rise to an
obligation (here the enterprise has norealistic alternatie but to pay
employee benefits.
2.2 If the ans(er to any of the aboe is yes, the
-tandard (ould apply to the aforesaid items.
2.3 • /his -tatement should be applied by
an employer in accounting for all
employee benefits, !/c!pt !(pl&y!!
#a%!-ba#!* pay(!"t#.
$he accountin for such benefits is
dealt #ith in the uidance Note on
-ccountin for "ployee Share!
based %ay"ents issued by the
/nstitute of (hartered -ccountants
of /ndia.
• /his -tatement does not deal (ith
accounting and reporting by employee
benefit plans.
2.& mployee 4enefits include0
• -hort /erm mployee 4enefits
• ost 7 mployment 4enefits
•8ther 6ong /erm mployee 4enefits
• /ermination 4enefits
2.$ mployee benefits include benefits proided
to either employees or their spouses,children or other dependants and may
be settled by payments made either0
!a" directly to the employees, to their spouses,
children or other dependants, or to their
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Chartered Accountants
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Qualify? Sch
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legal heirs or nominees9 or !b" to others, such as trusts, insurance
companies.
2.) An employee may proide serices to an
enterprise on a full'time, part time,
permanent, casual or temporary basis.5or the purpose of this -tatement, !(pl&y!!#
i"cl+*! $&l!-ti(! *i%!ct&%# a"*
&t!% (a"a,!(!"t p!%#&""!l.
2 SHO3T TE3M EMPLOYEE BENEFITS
2.1 4ased on our +"*!%#ta"*i", &f t! pay%&ll
b+#i"!## cycl! of the enterprise, the
reie( of !(pl&y!!# a"* b&&4) H.3.
p&lici!#, Mi"+t!# &f t!C&(p!"#ati&" C&((itt!!, if any,
reie( of the prior year (orking
papers, t! l!,al #tat+t!# applicabl!etc. ascertain (hether any of the
follo(ing employee benefits hae been
proided?
!a" (ages, salaries and social securitycontributions9
!b" short'term compensated absences !such as
paid annual leae" (here the ab#!"c!# a%!
!/p!ct!* t& &cc+% $iti" t$!l'! (&"t#
aft!% t! !"* &f t! p!%i&* in (hich the
employees render the related employeeserice9
!c" profit'sharing and bonuses payabl!$iti" t$!l'! (&"t# aft!% t! !"* &f t!
p!%i&* in (hich the employees render therelated serice9 and
!d" non'monetary benefits !such as medical
care, housing, cars and free or subsidisedgoods or serices" for current employees.
2.0 If the ans(er to any of the items coered by para 3.1 aboe is in the affirmatie,
then such employee benefits need to be
classified as S&%t T!%( E(pl&y!!
B!"!fit#.
2.2 3!c&,"iti&" a"* M!a#+%!(!"t:
nsure that the short term employee benefitsare measured on an +"*i#c&+"t!*
$
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K K Mankeshwar & Co.
Chartered Accountants
Yes N
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Qualify? Sch
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ba#i# and are recognised0
• As acc%+!* !/p!"#!#p%!pai*
!/p!"#!# as the case may be, based onthe amount of benefit is':'is the
amount already paid9 and
• As !/p!"#!#, unless any other
accounting standard permits the
inclusion of benefits in the cost of anasset.
2.6 S&%t T!%( C&(p!"#at!* Ab#!"c!#
2.6.1 Ascertain (hether the short term
compensated absences are acc+(+lati",, i.e.
(hether the absences can be carried for(ard
and can be used in future periods if thecurrent period;s entitlement is not used in
full?
2.6.0 • If the ans(er to para 3.&.1 aboe is in
the affirmatie, ensure that the
enterprise recognises the expectedcost of employee benefits (hen the
employees render serice that
increases their entitlement to futurecompensated absences.
• nsure that the obligation is
recognised, irrespectie of the fact(hether the compensated absences areesting or non' esting.
Vesting absences are those when employees
are entitled to a cash payment for unused entitlement on leaving the enterprise and non
– vesting absences are those when employees
are not entitled to a cash payment for unused entitlement on leaving.
2.6.2 nsure that the enterprise measures the
obligation at the amount of the additional
payments that are expected to arise solelyfrom the fact that the benefit accumulates.
2.6.6 In case of "&"-acc+(+lati", compensated
absences, ensure that the enterprise
recognises the expected cost of employee benefits only (hen the absences occur, e.g.
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8/17/2019 Accounting Standard 15 Revised
7/28
K K Mankeshwar & Co.
Chartered Accountants
Yes N
o
Qualify? Sch
no :
Ref
2.5.1 • Ascertain (hether the enterprise has
"& %!ali#tic alt!%"ati'! b+t t& (a4!
pay(!"t# on account of profitsharing and bonus as a result of past
eents 9 and
• Ascertain (hether a %!liabl! !#ti(at!
of such payments can be made?
2.5.0 a. Is there a formula for determining the
amount of bonus=share of profit,
(hich has been documented? b. >as the enterprise determined the
amounts to be paid before the
financial statements are approed?
c. oes the past practice gie clear eidence of the amount of the
enterprise;s obligation?
O"ly if t! a"#$!% t& a"y &f t! p&i"t#
ab&'! i# i" t! affi%(ati'!) t! !"t!%p%i#!
ca" (a4! a %!liabl! !#ti(at! &f t!
pay(!"t# t& b! (a*!.
2.5.2 If the ans(er to para 3.$.1 aboe is in
affirmatie, ensure that the enterprise has
recognised the expected cost of such benefitas an expense for the period.
2.7 8i#cl+%!#/his -tatement does not require specific
disclosures about short'term employee
benefits. >o(eer, (here other Accounting-tandards require disclosure (hether such
disclosures hae been made? 5or example,
(here required by A- 1+ #elated partydisclosures;, (hether the enterprise has
disclosed the information about employee
benefits for key management personnel?
9H&$!'!%) *i#cl+%! #&+l* b! (a*! &f t!
"at+%! &f t! #&%t t!%( !(pl&y!! b!"!fit#a"* t! acc&+"ti", p&licy a*&pt!* f&% t!
#a(!
6 POST EMPLOYMENT BENEFITS
6.1 4ased on &+% +"*!%#ta"*i", &f t! pay%&ll
b+#i"!## cycl! of the enterprise, t! %!'i!$&f !(pl&y!!# a"* b&&4) H.3. p&lici!#,
Mi"+t!# &f t! C&(p!"#ati&" C&((itt!!)
*
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8/17/2019 Accounting Standard 15 Revised
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K K Mankeshwar & Co.
Chartered Accountants
Yes N
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Qualify? Sch
no :
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if any, reie( of the prior year (orking papers, the l!,al #tat+t!# applicabl! etc.
ascertain (hether any of the follo(ing
employee benefits hae been proided?
• #etirement 4enefits such as gratuity
and pension.
• 8ther 4enefits such as post
employment life insurance and postemployment medical care.
6.0 If the ans(er to any of the items coered by para &.1 aboe is in the affirmatie, then such
employee benefits need to be classified as
Pt E(pl&y(!"t B!"!fit#.
6.2.1 Are the p%i"cipal t!%(# a"* c&"*iti&"# of the post employment benefit plans such that
the &bli,ati&" &f t! !"t!%p%i#! i# %!#t%ict!*
t& t! a(&+"t tat it a,%!!# t& c&"t%ib+t!
to a fund?
6.2.0 If yes, then the post employment benefit plan
must be classified as a *!fi"!* c&"t%ib+ti&"pla".
6.6.1 oes the enterprise hae an obligation
through0
!a" a plan benefit formula that is not linked
solely to the amount of contributions9 or !b" a direct or indirect guarantee, of a
specified return on contributions9 or !c" informal practices that gie rise to an
obligation.
6.6.0 If ans(er to any of items coered by para
&.&.1. aboe is in the affirmatie, the
!"t!%p%i#!;# &bli,ati&" i# "&t %!#t%ict!* t&
t! a(&+"t it a,%!!# t& c&"t%ib+t! t& t!
f+"*.
In such cases, the post employment benefit
plan must be classified as a *!fi"!* b!"!fitpla".
5 M
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b!"!fit pla", ensure that the enterprise has
acc&+"t!* for its p%&p&%ti&"at! #a%! &f the
*!fi"!* b!"!fit &bli,ati&") pla" a##!t# a"*
ct a##&ciat!* $it t! pla" in the same(ay as for any other defined benefit plan and
has *i#cl!* the information as required by
pa%a 02.
5.2 hen sufficient i"f&%(ati&" i# "&t a'ailabl!t& +#! *!fi"!* b!"!fit acc&+"ti", for a
multiemployer plan that is a defined benefit plan and c&"#!=+!"tly acc&+"t!* as a
*!fi"!* c&"t%ib+ti&" pla", (hether the
enterprise has0!a" disclosed the fact that the plan is a
defined benefit plan?
!b" disclosed the reason (hy sufficientinformation is not aailable to enable the
enterprise to account for the plan as a
defined benefit plan?!c" to the extent that a surplus or deficit in
the plan may affect the amount of future
contributions, disclosed in addition0
i. any aailable information about thatsurplus or deficit?
ii. the basis used to determine that
surplus or deficit?9 andiii. the implications, if any, for the
enterprise?
5.6 hether contingent liabilities arising in the
context of multi'employer plans hae been
disclosed as per A- 2, @roisions,
ontingent 6iabilities and ontingentAssets@?
Be.g., any responsibility under the terms of a
plan to finance any shortfall in the plan if other enterprises cease to participateC.
7 STATE PLANS
An enterprise should account for a state plan
in the same (ay as for a multi'employer plan!#efer para $ aboe"
> INS.1 oes the enterprise pay insurance premiums
to fund a post'employment benefit plan?
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>.0 If y!#, then the enterprise should treat such a plan as a *!fi"!* c&"t%ib+ti&" pla") +"l!##the enterprise %!tai"# a" &bli,ati&" to either0
a. pay the employee benefits directly(hen they fall due9 or
b. pay further amounts if the insurer
does not pay all future employee benefits relating to employee serice
in the current and prior periods.
If t! !"t!%p%i#! %!tai"# #+c &bli,ati&",
the enterprise should treat the plan as a
*!fi"!* b!"!fit pla".
? 8EFINE8 CONT3IB
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by A- 1+, @#elated artyisclosures;?
8EFINE8 BENEFIT PLANS
.1 Accounting for defined benefit plans is ba#!*&" act+a%ial a##+(pti&"# made to measure
the obligation and the expense and there is a possibility of actuarial gains and losses. /he obligations are (!a#+%!* &" a*i#c&+"t!* ba#i#.
.0 nsure that the enterprise has "&t &"lyaccounted for its l!,al &bli,ati&" +"*!% t!
f&%(al t!%(# of a defined benefit plan, b+t
al#& for any other &bli,ati&" tat a%i#!#
f%&( t! !"t!%p%i#!;# i"f&%(al p%actic!#.
nformal practices give rise to an obligationwhere the enterprise has no realistic
alternative but to pay employee benefits.
.2 Bala"c! S!!t
nsure that the a(&+"t %!c&,"i#!* a# a
*!fi"!* b!"!fit liability is the net total of the
follo(ing amounts0!a" the present alue of the defined benefit
obligation at the 4alance -heet date9
!b" minus any past serice cost not yetrecognised9
!c" minus the fair alue at the 4alance -heet
date of plan assets !if any" out of (hich theobligations are to be settled directly.
.2.1 8btain the copies of the Actuarial Daluation
#eport proided by an qualified actuary and0
• Derify the data (hich has been
considered by the Actuary (ith the
underlying records of the enterprise.
• 8btain a reconciliation of number of
employees at the beginning of the
year and the end of the year.• ross tally the number of employees
as per the aluation report (ith the payroll register.
.2.0 • nsure that the p%!#!"t 'al+! &f t!
*!fi"!* b!"!fit &bli,ati&" has been
*!t!%(i"!* %!,+la%ly at interals not
exceeding three years.
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• nsure that the (t %!c!"t
'al+ati&" has been reie(ed as at the
4alance -heet date and updated for any material changes likely to affect
the aluations.
• nsure that the fai% 'al+! &f pla"
a##!t# is determined at !ac Bala"c!S!!t *at!.
.2.2 In case the amount determined under para .3
aboe is negatie, ensure that the enterprisehas measured the resulting asset at the lo(er
of0
!a" the amount determined under paragraph
.39 and!b" the present alue of any economic
benefits aailable in the form of refunds from
the plan or reductions in future contributionsto the plan.
!he present value of these economic benefits
should be determined using the discount rate specified in para 14 below.
.6 P%&fit a"* L# Acc&+"t
nsure that the enterprise has recognised thenet total of the follo(ing amounts in the
rofit and 6oss Account, except to the extentthat another Accounting -tandard requires or permits their inclusion in the cost of an asset0
a. current serice cost9
b. interest cost9c. the expected return on any plan assets
and on any reimbursement9
d. actuarial gains and losses9e. past serice cost to the extent that
para 1* belo( requires an enterprise
to recognise it9
f. the effect of any curtailments or settlements9 and
g. the effect of the limit in para .3.3
!b" , i.e., the extent to (hich theamount determined under para .3 !if
negatie" exceeds the amount
determined under para .3.3 !b".
1 P3ESENT @AL
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BENEFIT OBLIATIONS AN8
C
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12 Act+a%ial A##+(pti&"#
hile making actuarial assumptions, ensure
that the actuary has considered both*!(&,%apic a##+(pti&"# and fi"a"cial
a##+(pti&"#.
12.1 8!(&,%apic a##+(pti&"# (hich deal (ith
matters such as0
i. mortality, both during and after
employment9ii. rates of employee turnoer, disability
and early retirement9
iii. the proportion of plan members (ithdependants (ho (ill be eligible for
benefits9 and
i. claim rates under medical plans9 and
Fi"a"cial a##+(pti&"# (hich deal (ith
items such as0
i. the discount rate9ii. future salary and benefit leels9
iii. in the case of medical benefits, future
medical costs, including, (here
material, the cost of administeringclaims and benefit payments9 and
i. the expected rate of return on plan
assets.
12.0 nsure that actuarial assumptions are
• neither imprudent nor excessiely
conseratie. i.e they are +"bia#!*and
• reflect the economic relationships
bet(een factors such as inflation,rates of salary increase, the return on
plan assets and discount rates. i.e.
they a%! (+t+ally c&(patibl!.
12.2 nsure that the financial assumptions are
based on market expectations, at the 4alance-heet date, for the period oer (hich theobligations are to be settled.
16 Act+a%ial A##+(pti&"#: 8i#c&+"t 3at!
• nsure that the discount rate used by
the actuary has been determined by
reference to (a%4!t yi!l*# at the
4alance -heet date &" &'!%"(!"t
1&
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b&"*#.
• nsure that the currency and term of
the Eoernment bonds is consistent(ith the currency and estimated term
of the post'employment benefitobligations.
16.1 I"t!%!#t Ct
nsure that the interest cost is computed by
multiplying the discount rate as determined at
the start of the period by the present alue of the defined benefit obligation throughout that
period, taking account of any material
changes in the obligation.
15 Act+a%ial A##+(pti&"#: Sala%i!#) B!"!fit#a"* M!*ical Ct#.
15.1 nsure that the measurement of post
employment benefit obligations reflects
!#ti(at!* f+t+%! #ala%y i"c%!a#!#. "stimates of future salary increases should
ta#e account of inflation, seniority, promotion
and other relevant factors, such as supply
and demand in the employment mar#et .
15.0 If the f&%(al t!%(# &f a pla" !or an
obligation that goes beyond those terms"
%!=+i%! an enterprise to ca",! b!"!fit# i"f+t+%! p!%i&*#, ensure that the measurement
of the obligation reflects those changes.
15.2 In cases (here the post'employment benefits
are li"4!* t& 'a%iabl!# such as the leel of
#tat! %!ti%!(!"t b!"!fit# or #tat! (!*ical
ca%!) ensure that the measurement of such
benefits reflects !/p!ct!* ca",!# i" #+c
'a%iabl!#) based on pa#t i#t&%y and other
%!liabl! !'i*!"c!.
15.6 hile making assumptions about (!*ical
ct#, ensure that the enterprise hasconsidered the !#ti(at!* f+t+%! ca",!# i"t! ct &f (!*ical #!%'ic!#, resulting from both i"flati&" and #p!cific ca",!# i"
(!*ical ct#.
15.5 nsure that the enterprise has !#ti(at!*
f+t+%! (!*ical ct# &" t! ba#i# &f it# &$"i#t&%ical *ata.
1$
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no :
Ref
here considered necessary, the enterprisemay also use i#t&%ical *ata of &t!%!"t!%p%i#!#, i"#+%a"c! c&(pa"i!#, (!*ical
p%&'i*!%# or &t!% #&+%c!#.While estimating of future medical costs, the
enterprise must consider the effect of
technological advances, changes in healthcare utilisation or delivery patterns and
changes in the health status of plan
participants.
17 Act+a%ial ai"# a"* L#!#
nsure that the actuarial gains and lossesarising on account of increases or decreases
in either the present alue of a defined benefit
obligation or the fair alue of any related planassets are %!c&,"i#!* i((!*iat!ly in the
rofit and 6oss Account a# i"c&(! &%!/p!"#!.
1> Pa#t S!%'ic! Ct
>as the enterprise introduced a defined benefit plan or changed the benefits payable
under an existing defined benefit plan?
If yes, ensure that the past serice cost arisingout of such changes has been %!c&,"i#!* as
an expense on a #t%ai,t li"! ba#i# &'!% t!a'!%a,! p!%i&* until the benefits becomeested.
If the b!"!fit# '!#t i((!*iat!ly, the past
serice cost should be %!c&,"i#!*
i((!*iat!ly.
1? Fai% @al+! &f Pla" A##!t#
• hen the (a%4!t p%ic! for plan
assets is "&t a'ailabl!) ensure that thefair alue of plan assets is !#ti(at!* by *i#c&+"ti", t! !/p!ct!* f+t+%!
ca# fl&$#.• nsure that the discount rate used,
reflects both the risk associated (ith
the plan assets and the maturity or expected disposal date of those assets.
1?.1 nsure that the plan assets exclude0
• Fnpaid contributions due from the
reporting enterprise to the fund9 and
1)
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• Any non'transferable financial
instruments issued by the enterprise
and held by the fund.1?.0 nsure that the plan assets are reduced by anyliabilities of the fund that do not relate to
employee benefits, e.g. trade payable,
liabilities resulting from deriatie financialinstruments etc.
1?.2 Where plan assets include $ualifying
insurance policies that e%actly match theamount and timing of some or all of the
benefits payable under the plan, the fair
value of those insurance policies is deemed to
be the present value of the related obligations.
1 3!i(b+%#!(!"t#
Ascertain (hether there is a 'i%t+al c!%tai"tythat another party (ill reimburse some or all
of the expenditure required to settle a defined
benefit obligation
If yes0
• nsure that the enterprise has
recognised its right to reimbursement
as a #!pa%at! a##!t and the same has
been measured at Fai% @al+!.• nsure that the asset is treated in the
same (ay as a pla" a##!t.
• In the rofit and 6oss Account, ensure
that the !/p!"#! relating to a defined
benefit plan has been presented "!t &f t! a(&+"t %!c&,"i#!* f&% a
%!i(b+%#!(!"t.
0 3!t+%" &" Pla" A##!t#
• nsure that expected return on plan
assets has been recognised as the
component of the expense in therofit and 6oss Account.
• nsure that enterprise has determined
the expected return on plan assets on
basis of the market expectations, atthe beginning of the period, for
returns oer the entire life of the
related obligation.
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• nsure that the difference bet(een the
expected return on plan assets and the
actual return on plan assets isrecognised as an actuarial gain or loss.
• hile determining the expected and
actual return on plan assets, ensure
that the enterprise has deducted the
expected administration costs, other
than those included in the actuarialassumptions used to measure the
obligation.
01 C+%tail(!"t# a"* S!ttl!(!"t#
01.1 Is the enterprise required to0
a. make a (at!%ial %!*+cti&" in the"+(b!% &f !(pl&y!!# coered by a
plan, due to the requirement of a
statute=regulator or other(ise9 or
b. amend the terms of a defined benefit
plan such that a (at!%ial !l!(!"t &f
f+t+%! #!%'ic! by current employees(ill "& l&",!% =+alify f&% b!"!fit#,
or (ill =+alify only f&% %!*+c!*b!"!fit#.
If yes, then there is c+%tail(!"t of employee
benefits.01.0 >as the enterprise entered into a transactionthat !li(i"at!# all f+%t!% &bli,ati&"# for
part or all of the benefits proided under a
defined benefit plan.If yes, then there is a #!ttl!(!"t of employee
benefits.
01.6 nsure that the enterprise has %!c&,"i#!* the
,ai"# &% l#!# on the curtailment or
settlement $!" t! c+%tail(!"t &%
#!ttl!(!"t &cc+%#.
01.5 nsure that the gain or loss on a curtailmentor settlement comprise0!a" any resulting change in the present alue
of the defined benefit obligation9
!b" any resulting change in the fair alue of the plan assets9
!c" any related past serice cost that had not
preiously been recognised.
1+
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K K Mankeshwar & Co.
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01.7 4efore determining the effect of a curtailmentor settlement, ensure that the enterprise has
remeasured the obligation !and the related
plan assets, if any" using current actuarialassumptions.
00 P%!#!"tati&" - Off#!toes the enterprise0
!a" hae a legally enforceable right to use a
surplus in one plan to settle obligations under the other plan?
!b" intend either to settle the obligations on a
net basis, or to realise the surplus in one planand settle its obligation under the other plan
simultaneously?If yes, the enterprise can offset an assetrelating to one plan against a liability relating
to another plan.
02 8i#cl+%!# hether the enterprise has disclosed thefollo(ing information about defined benefit plans0!i" information that enables users of financial statements to ealuate0
!a" the nature of the plans?
!b" the financial effects of changes in those plans during the period?
!ii" the enterprise@s accounting policy for
recognising actuarial gains and losses?!iii" a general description of the type of plans?
Note: tem &iii' distinguishes, for e%ample, flat salary pension plans from final salary
pension plans and from post(employment
medical plans. !he description of the plan should include informal practices that give
rise to other obligations included in the
measurement of the defined benefit obligationin accordance with para )* of + 1) &revised
-)'.!i" a reconciliation of opening and closing balances of the present alue of the defined benefit obligations sho(ing separately, if applicable, the effects during the periodattributable to each of the follo(ing0
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!a" current serice cost?
!b" interest cost?
!c" contributions by plan participants?
!d" actuarial gains and losses?
!e" foreign currency exchange rate on plans measured in a currency from theenterprise@s reporting currency?
!f" benefits paid?
!g" past serice cost?
!h" amalgamations?
!i" curtailments?
!G" settlements?
!" an analysis of the defined benefit
obligation into amounts arising from plansthat are unfunded and amounts arising from plans that are (holly or partly funded?!i" a reconciliation of the opening andclosing balances of the fair alue of planassets and of the opening and closing balances of any reimbursement rightrecogniHed as an asset in accordance (ith para 1%3 of A- 1$ !reised 2%%$" sho(ingseparately, if applicable, the effects duringthe period attributable to each of thefollo(ing0
!a" expected return on plan assets?!b" actuarial gains and losses?
!c" foreign currency exchange rate
changes on plans measured in a currency
different from the enterprise@s reportingcurrency?!d" contributions by the employer?
!e" ontributions by the plan participants?
!f" benefits paid?
!g" amalgamations?
!h" settlements?
!ii" a reconciliation of the present alue of the defined benefit obligation in !i" aboeand the fair alue of the plan assets in !i"aboe to the assets and liabilities recognisedin the 4alance -heet sho(ing at least0
!a" the past serice cost not yet recognisedin the 4alance -heet !see para & of A- $!reised 2%%$"?
2%
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Chartered Accountants
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Qualify? Sch
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!b" any amount not recogniHed as an asset because of the limit in para $!b" of A- 1$!reised 2%%$"?!c" the fair alue at the 4alance -heet dateof any reimbursement right recognised asan asset in accordance (ith para 1%3 of A-1$ !reised 2%%$" !(ith a brief descriptionof the link bet(een the reimbursementright and the related obligation"?
!d" the other amounts recognised in the4alance -heet?iii" the total expense recognised in therofit and 6oss Account of each of thefollo(ing, and the line item!s" of the rofit
and 6oss Account in (hich they areincluded0
!a" current serice cost?
!b" interest cost?
!c" expected return on plan assets?
!d" expected return on any reimbursementright recognised as an asset under paragraph 1%3 of A- 1$ !reised 2%%$"?!e" actuarial gains and losses?
!f" past serice cost?
!g" the effect of any curtailment or
settlement?!h" the effect of the limit in paragraph$!b" of A- 1$ !reised 2%%$", i.e., theextent to (hich the amount determinedunder para $$ of A- 1$ !reised 2%%$" !if negatie" exceeds the amount determinedunder para $ !b" of A- 1$ !reised 2%%$"?
!ix" for each maGor category of plan assets,(hich should include, but is not limited to,equity instruments, debt instruments, property, and all other assets, the percentageor amount that each maGor category
constitutes of the fair alue of the total planassets?!x" the amounts included in the fair alue of the plan assets for0
!a" each category of the enterprise@s o(nfinancial instruments?!b" !i" any property occupied by the
enterprise?
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!ii" other assets used by the enterprise?!xi" a narratie description of the basis usedto determine the oerall expected rate of return on assets, including the effect of themaGor categories of plan assets?!xii" the actual return on0
a" plan assets?
b" any reimbursement right recognisedas an asset in accordance (ith para1%3 of A- 1$ !reised 2%%$"?
!xiii" the principal actuarial assumptionsused as at the 4alance -heet date, including,(here applicable0
!a" the discount rates?
!b" the expected rates of return on any planassets for the periods presented in thefinancial statements?!c" the expected rates of return for the periods presented in the financialstatements on any reimbursement rightrecognised as an asset under para 1%3 of A- 1$ !reised 2%%$"?!d" medical cost trend rates?
!e" any other material actuarialassumptions used?!f" an assertion under the actuarialassumptions to the effect that estimates of future salary increases, considered inactuarial aluation, take account of inflation, seniority, promotion and other releant factors such as supply anddemand in the employment market?
!xi" keeping all other assumptions constant,the effect of an increase of one percentage point and the effect of a decrease of one percentage point in the assumed medicalcost trend rates on0
!a" the aggregate of the current serice
cost and interest cost components of net periodic post'employment medical costs?!b" the accumulated post'employment benefit obligation for medical costs?
Note: /or item &%iv' above, for plansoperating in a high inflation environment, thedisclosure should be the effect of a percentage increase or decrease in the
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K K Mankeshwar & Co.
Chartered Accountants
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assumed medical cost trend rate of a significance similar to one percentage point in a low inflation environment.
!x" the amounts for the current annual period of0!a" !i" the present alue of the defined benefitobligation?
!ii" fair alue of plan assets? !iii" the surplus or deficit in a plan?!b" the experience adGustments arising on0!i" the plan liabilities expressed either as anamount or as a percentage of the plan
liabilities at the 4alance -heet date? and!ii" the plan assets expressed either as anamount or as a percentage of the plan assets
at the 4alance -heet date?!c" the employer@s best estimate, as soon as it
can reasonably be determined, of
contributions expected to be paid to the planduring the annual period beginning after the
4alance -heet date?hether the enterprise has disclosed eachactuarial assumption in absolute terms !for example, as an absolute percentage" and not Gust as a margin bet(een different percentage or other ariables?
here an enterprise has more than onedefined benefit plan, (hether disclosureshae been made in total 0!i" separately for each plan? or!ii" in such grouping as are considered to bemost useful?hen an enterprise proides disclosures intotal for a grouping of plans, (hether disclosures are proided in the form of'!i" (eighted aerage? or!ii" of relatiely narro( ranges?here required by A- 1+, @#elated artyisclosures@, (hether the enterprise hasdisclosed information about0 '!i" related party transactions (ith post'employment benefit plans? and!ii" post'employment benefits for keymanagement personnel?hen required by A- 2, @roisions,ontingent 6iabilities and ontingent
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Qualify? Sch
no :
Ref
Assets@, (hether the enterprise disclosesinformation about contingent liabilitiesarising from post'employment benefitobligations?
06 OTHE3 LON TE3M EMPLOYEEBENEFITS
06.1 Ba#!* &" &+% understanding of the payroll business cycle &f t! !"t!%p%i#!) t! %!'i!$&f employees hand book, >.#. policies)Mi"+t!# &f t! C&(p!"#ati&" C&((itt!!)if a"y) %!'i!$ &f t! p%i&% y!a% $&%4i",pap!%#) t! l!,al #tat+t!# applicabl! !tc.)a#c!%tai" $!t!% a"y &f t! f&ll&$i",!(pl&y!! b!"!fit# a'! b!!" p%&'i*!*
!a" long'term compensated absences such aslong'serice or sabbatical leae9
!b" Gubilee or other long'serice benefits9
!c" long'term disability benefits9
!d" profit'sharing and bonuses payabl!
t$!l'! (&"t# &% (&%! aft!% t! !"* &f t!
p!%i&* in (hich the employees render the
related serice9 and!e" deferred compensation paid t(ele
months or more after the end of the period in
(hich it is earned.
06.0 If the ans(er to any of the items coered by para 2&.1 aboe is in the affi%(ati'!) thensuch employee benefits need to be classifiedas L&", T!%( E(pl&y!! B!"!fit#.
06.2 3!c&,"iti&" a"* M!a#+%!(!"t
nsure that the amount recognised as a
liability for other long'term employee
benefits is the "!t t&tal of the follo(ingamounts0
!a" the p%!#!"t 'al+! &f t! *!fi"!* b!"!fit
&bli,ati&" at the 4alance -heet date9
!b" minus the fai% 'al+! at the 4alance -heetdate &f pla" a##!t# !if any" out of (hich the
obligations are to be settled directly.
M!a#+%!(!"t of the liability should be on
the #a(! ba#i# a# 8!fi"!* B!"!fit Pla"# as
stated in para to 1$ aboe.
#ecognition and measurement of anyreimbursement right should be in accordance
2&
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Ref
(ith para 1 aboe.06.6 nsure that the "!t t&tal of the follo(ing
amounts is recognised as an !/p!"#! &%i"c&(!) except to the extent that another
Accounting -tandard requires or permits their
inclusion in the cost of an asset0!a" current serice cost9
!b" interest cost 9
!c" the expected return on any plan assets and
on any reimbursement right recognised as anasset9
!d" actuarial gains and losses, (hich should
all be recognised immediately9!e" past serice cost, (hich should all be
recognised immediately9 and!f" the effect of any curtailments or settlements.
06.5 8i#cl+%!#/his -tatement does not require specificdisclosures about long term employee benefits. >o(eer, (here other accountingstandards require specific disclosures aboutother long term employee benefits, (hether such disclosures hae been made?!e.g., A- $ , @et rofit or 6oss for the eriod,rior eriod Items and hanges in Accounting
olicies@, A- 1+, @#elated arty isclosures@".05 TE3MINATION BENEFITS
05.1 • nsure that the enterprise %!c&,"i#!#
termination benefits as a liability and
an !/p!"#! &"ly $!"0
a. a p%!#!"t &bli,ati&" arises asa result of a past eent9
b. there is a probability that an
&+tfl&$ &f %!#&+%c!# (ill berequired to settle the
obligation9 and
c. the a(&+"t of the obligationcan be %!liably !#ti(at!*.
• nsure that the termination benefits
are %!c&,"i#!* i((!*iat!ly as an
!/p!"#!.
• If the termination benefits fall *+!
(&%! ta" 10 (&"t# aft!% the
2$
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Qualify? Sch
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Ref
balance sheet date, ensure that theyhae been *i#c&+"t!* using the
discount rate specified in para 1&
aboe.05.0 8i#cl+%!#
!i" here there is uncertainty about thenumber of employees (ho (ill accept anoffer of termination benefit, (hether theenterprise has disclosed information aboutthe contingent liability unless the possibilityof outflo( in settlement is remote? !A- 2,@roisions, ontingent 6iabilities andontingent Assets@"!ii" here termination benefit is of such
siHe, nature or incidence that its disclosure isreleant to explain the performance of theenterprise for the period, (hether termination benefits hae been disclosedappropriately?!A- $, @et rofit or 6oss for the eriod,rior eriod Items and hanges inAccounting olicies@"?!iii" here required by A- 1+, @#elated artyisclosures@, (hether the enterprise hasdisclosed information about termination
benefits for key management personnel?07 T3ANSITIONAL P3O@ISIONS07.1 E(pl&y!! B!"!fit# &t!% ta" 8!fi"!*
B!"!fit Pla"# a"* T!%(i"ati&" B!"!fit#:nsure that the *iff!%!"c! !as adGusted byany related tax expense" bet(een theliability, existing on the date of adopting this-tandard and the liability that (ould hae been recognised at the same date, as per the pre'reised A- 1$, has been a*+#t!*against &p!"i", bala"c! &f %!'!"+!%!#!%'!# a"* #+%pl+#.
07.0.1 8!fi"!* B!"!fit Pla"#nsure that the enterprise has determined the
liability &" t! *at! &f fi%#t a*&pti", this
-tandard as under0!a" the p%!#!"t 'al+! &f t! &bli,ati&" at the
*at! &f a*&pti&"9
!b" minus the fai% 'al+!, at the *at! &f
a*&pti&", &f pla" a##!t# !if any" out of
2)
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(hich the obligations are to be settleddirectly9
!c" minus any pa#t #!%'ic! ct that should
be recognised in later periods.07.0.0 If the t%a"#iti&"al liability i# (&%! than the
liability that (ould hae been recognised atthe same date as per the pre'reised A- 1$,
the enterprise can make an i%%!'&cabl!c&ic! t& %!c&,"i#! that i"c%!a#! as part of
its defined benefit liability0!a" i((!*iat!ly as an adGustment a,ai"#t t!&p!"i", bala"c! &f %!'!"+! %!#!%'!#
a"* #+%pl+# !as adGusted by any related taxexpense", or
!b" as an !/p!"#! &" a #t%ai,t-li"! ba#i#oer +p t& fi'! y!a%# from the date of adoption.
07.0.2 If an enterprise chooses option !b" aboe,ensure that the enterprise has0
!i" appli!* t! li(it *!#c%ib!* i" pa%a.2.29b aboe in measuring any asset
recognised in the 4alance -heet9!ii" *i#cl!* at each 4alance -heet date0
!1" the amount of the i"c%!a#! tat %!(ai"#
+"%!c&,"i#!*9 and!2" the a(&+"t %!c&,"i#!* in the current
period9
!iii" li(it!* t! %!c&,"iti&" &f #+b#!=+!"t
act+a%ial ,ai"# only to the extent that the
net cumulatie unrecognised actuarial gains
exceed the unrecognised part of the
transitional liability9 and!i" i"cl+*!* the related part of the
+"%!c&,"i#!* t%a"#iti&"al liability in
*!t!%(i"i", any #+b#!=+!"t ,ai" &% l# &"
#!ttl!(!"t &% c+%tail(!"t.07.0.6 If the t%a"#iti&"al liability i# l!## than the
liability that (ould hae been recognised at
the same date as per the pre'reised A- 1$,
the enterprise should %!c&,"i#! the *!c%!a#!
i((!*iat!ly as an adGustment a,ai"#t t!
&p!"i", bala"c! &f %!'!"+! %!#!%'!# a"*
#+%pl+#.
2*
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07.2 T!%(i"ati&" B!"!fit#
here an enterprise incurs expenditure on
termination benefits on or before 31st
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