Accounting Standard 15: The Accounting Standard 15 - ‘Employee Benefits’ (AS 15), generally deals with all forms of employee benefits all forms of consideration given by an enterprise in exchange for services rendered by employees (other than inventory compensation for which a separate guidance note is promulgated).
The Standard addresses only the accounting of employee benefits by employers. The Standard makes four things very clear at the outset:
- (i) the Standard is applicable to benefits provided to all types of employees (whether full-time, part-time, or casual staff;
- (ii) employee benefits can be paid in cash or in kind;
- (iii) employee benefits include benefits provided to employees and their dependents (spouses, children and others); and
- (iv) payment can be made directly to employees, their dependent or to any other party (e.g., insurance companies, trust etc.).
Ind AS 19 Employee Benefits
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
The objective of this Standard is to prescribe the accounting and disclosure for employee benefits. The Standard requires an entity to recognise:
- (a) a liability when an employee has provided service in exchange for employee benefits to be paid in the future; and
- (b) an expense when the entity consumes the economic benefit arising from service provided by an employee in exchange for employee benefits.
This Standard shall be applied by an employer in accounting for all employee benefits, except those to which Ind AS 102, Share-based Payment, applies.
Difference Between AS 15 and Ind AS 19
|AS 15||IND AS 19|
|Under AS 15, employees include Whole time directors only.||Under IND AS 19, employee includes all types of directors.|
|Under AS 15, actuarial gains and losses are to be recognised immediately in the statement of profit and loss.||Ind AS 19 requires the recognition of the actuarial gains and losses in the statement of other comprehensive income. Further, the actuarial gains and losses, so recognised in other comprehensive income, should be recognised immediately in retained earnings and should not be reclassified in the statement of profit or loss of the subsequent period.|
|It does not deal with the same.||Employee benefits arising from constructive obligations are also covered.|
|AS 15 always requires the use of market yield on government bonds.||
As per IND AS 19, the discount rate shall be determined w.r.t. the market yield on govt. bonds.
But, in case of subsidiaries, associates, joint ventures and branches domiciled outside India, the discount rate for calculating post employment benefit obligation should be determined w.r.t. market yield on high quality corporate bonds and in the absence of a deep market for such bonds, the government bonds shall be used.
|AS 15 neither require nor encourages the entity to involve a qualified actuary for measurement of material post-employment benefits.||Ind AS 19 encourages, but does not mandate an entity to involve a qualified actuary in the measurement of material post-employment benefit obligations.|
|AS 15 does not deal with it.||
Ind AS 19 deals with the situations where there is a contractual agreement between a multiemployer
plan and its participants, that determines how the surplus in the plan will be distributed to the participants or how the deficit will be funded.
|AS 15 does not contain similar provisions.||Participation in a defined benefit plan and thereby, sharing the risks, by various entities under common control, is a related party transaction for each group entity and some disclosures are required in the financial statements of such entities.|
There are differences in the following definitions between AS 15 and Ind AS 19:
|AS 15 does not clarify the same.||Ind AS 19 makes it clear that the Financial assumptions should be based on market expectations, at the balance sheet date, for the period over which the obligations are to be settled.|
|More guidance has been given on the timing of recognition of termination benefits. The criteria for recognition of termination benefits is also different in IND AS 19, as compared to AS 15.|
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