Applying Pas 19 Revised (Ifrs)- Ernst&Young
Applying IFRS
IAS 19 Employee Benefits — revised June 2011
Implementing the 2011 revisions to employee benefits
November 2011
Insert colour image
1
In this issue:
Introduction Defined benefit plans Significant changes Interim reporting considerations Modified disclosures Clarifications on termination benefits 2 3 3 8 9 12
What you need to know • Revisions to IAS 19 Employee Benefits published by the IASB on 16 June 2011 result in significant changes in accounting for defined benefit pension plans. There are also a number of other changes, including modification to the timing of recognition for termination benefits, the classification of short-term employee benefits and disclosures of defined benefit plans. • The accounting options available under current IAS 19 have been eliminated, resulting in increased comparability between the financial statements of IFRS reporters. • Highlights from the changes for defined benefit plan accounting include: • Actuarial gains and losses are now required to be recognised in other comprehensive income (OCI) and excluded permanently from profit and loss. • Expected returns on plan assets will no longer be recognised in profit or loss. Expected returns are replaced by recording interest income in profit or loss, which is calculated using the discount rate used to measure the pension obligation. • Unvested past service costs can no longer be deferred and recognised over the future vesting period. Instead, all past service costs will be recognised at the earlier of when the amendment/ curtailment occurs or when the entity recognises related restructuring or termination costs. • These revisions are effective for annual periods beginning on or after 1 January 2013, retrospectively, with very few exceptions. Early application is permitted.
New definition of short-term employee benefits 14 Transition Appendix: Main differences or clarifications at a glance 16
17
Implementing the 2011 revisions to employee
IAS 19 Employee Benefits — revised June 2011
Implementing the 2011 revisions to employee benefits
November 2011
Insert colour image
1
In this issue:
Introduction Defined benefit plans Significant changes Interim reporting considerations Modified disclosures Clarifications on termination benefits 2 3 3 8 9 12
What you need to know • Revisions to IAS 19 Employee Benefits published by the IASB on 16 June 2011 result in significant changes in accounting for defined benefit pension plans. There are also a number of other changes, including modification to the timing of recognition for termination benefits, the classification of short-term employee benefits and disclosures of defined benefit plans. • The accounting options available under current IAS 19 have been eliminated, resulting in increased comparability between the financial statements of IFRS reporters. • Highlights from the changes for defined benefit plan accounting include: • Actuarial gains and losses are now required to be recognised in other comprehensive income (OCI) and excluded permanently from profit and loss. • Expected returns on plan assets will no longer be recognised in profit or loss. Expected returns are replaced by recording interest income in profit or loss, which is calculated using the discount rate used to measure the pension obligation. • Unvested past service costs can no longer be deferred and recognised over the future vesting period. Instead, all past service costs will be recognised at the earlier of when the amendment/ curtailment occurs or when the entity recognises related restructuring or termination costs. • These revisions are effective for annual periods beginning on or after 1 January 2013, retrospectively, with very few exceptions. Early application is permitted.
New definition of short-term employee benefits 14 Transition Appendix: Main differences or clarifications at a glance 16
17
Implementing the 2011 revisions to employee