AS15 REVISED 2005 EMPLOYEES BENEFITS

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AS-15( REVISED 2005) EMPLOYEES BENEFITS

• PRESENTED By
  -
• 
  Dr. RAJ. K. AGARWAL
• 
  FCA,FCS,AICWA,LLB, Phd.
  
  
  RAKESH RAJ ASSOCIATES

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AS-15(Revised 2005 Employees Benefit)

• BASIC PRINCIPLE
• -Recognize the expenses of benefit to employees
  
• during their service Period, which may be paid.
• Currently,
• On Retirement, or
• Post Retirement

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AS-15 (REVISED 2005- EMPLOYEES BENEFITS)

• APPLICABILITY
• With effect from accounting period commencing on
  or after 1.04.2006
• Level I Enterprises
  -in entirety
• Other than level I Enterprises - para 11 to
  16, 46
• having 50 or more employees and 139
  not applicable para 50
  to 116 limited
  applicability
• less than 50 employees - do
• 
  instead of actuarial
  valuation, some
  other method may be
  used.

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AS-15(Revised 2005-Employees Benefits)

• SCOPE
• -It Covers all employee Benefits as per
• Formal agreement
• Legislative requirement
• Informal practice
• -It does not cover
• Profit Sharing Plans
• Employee benefit Plans e.g., ESOP

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AS 15(Revised 2005- Employees Benefit)

• NATURE OF BENEFITS
• -Short term employees Benefits
• (payable within 12 months after providing
  Services)
• - Wages, Salaries
• - Leave Compensation
• - Bonus
• - Non Monetary Benefits
• -Post Employment Benefits
• - Gratuity
• - Pension/Superannuation
• - Provident Fund
• - Medical Facilities

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AS 15(Revised 2005- Employees Benefit)

• - Other long term Employee Benefits
• ( Payable after 12 months of providing
  service)
• - Long Service Leaves
• - Bonuses
• - Deferred
  Compensation
• - Termination Benefits Compensations and
  other benefits
• on
  termination or pre mature
• 
  retirement.

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AS 15(Revised 2005- Employees Benefit)

• Short Term Employee Benefits
• Salaries, wages and other non-monetary Benefits
• - To Account
  for in Current Period
• - Not To Discount
• Leaves Fully Encashable - Full
  Provision
• Lapsing - No Provision
• Accumulating - Provision for
• Expected
  Liabilities
• Bonus May be contingent upon future
  service
• To provide for
  expected liability.

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AS 15(Revised 2005- Employees Benefit)

• Post Employment Benefits
• Defined Contribution Plans
• Defined Benefit Plans

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AS 15(Revised 2005- Employees Benefit)

• Defined Contribution Plans
• Liability of Enterprise Periodic
  Contribution
• 
  e.g. Provident Fund.
• - On Retirement Employee gets Accumulated
• Contribution and
• Appreciation of Fund.

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AS 15(Revised 2005- Employees Benefit)

• Defined Benefit Plans
• Benefit on Retirement or Post Retirement
• - Expense to be provided during service
  period of
• the employee.
• Liability for Expense
• Unfunded Funded
• - State Fund
• -
  Trust Fund
• -
  Insurance Fund
• -
  Mutual Fund
• 
  ( To Create Plan Asset)

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AS 15(Revised 2005- Employees Benefit)

• Group Gratuity Scheme of Insurers
• Whether Defined Contribution Plan ?
• Whether it provides insurance cover?
• Or
• It is only a plan Asset ?

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AS 15(Revised 2005- Employees Benefit)

• Non Vesting Benefits also to be provided e.g.
  Gratuity payable after completion of five year of
  service but to be provided from Ist Year

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• AS 15(Revised 2005- Employees Benefit)
• Defined Benefit Plans
• Estimation of liability of Benefits
• Using Actuarial assumptions
• Discounting to Determine present Value (A)
• Using Projected Unit credit
• Method.
• Determine Fair Value of Plan Assets (B)
• Difference of A-B to be carried in Balance
  Sheet as Defined Benefit Liability.

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• AS 15(Revised 2005- Employees Benefit)
• Defined Benefit Plans
• Expenses to be provided in Pl Account to
  Constitute
• - Current Service Cost
• - Interest Cost
• - Expected Return on plan asset
• - Actuarial gain or losses
• - Past Service Cost
• - Effect of any curtailment or settlement

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AS 15(Revised 2005- Employees Benefit)

• Actuarial Assumptions
• Demographic - Mortality
• - Employee Turnover
• Financial - Future Salary increase
• - Discount rate
• - Return on plan asset
• - Medical Treatment Cost
• - Change in cost of Medical Services
• Discount rate to be as per return on
  Government
• Bonds

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AS 15(Revised 2005- Employees Benefit)

• Special Features of Revised AS-15
• Disclosure of Different Components of cost to be
  charged to P L Account.
• Disclosure and break up of actuarial assumptions.
• Discounting Rates as per yield on Government
  Bonds.
• Actuarial Assumptions may be reviewed by
  Management/ Auditors.
• Benefit Obligations and plan asset to be
  separately disclosed.
• Management of plan assets is separately
  reflected.

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AS 15(Revised 2005- Employees Benefit)

• Disclosures
• Nature of Defined Benefit plans and effect of
  changes if any.
• Break up and reconciliation of different
  components of defined benefit obligation.
• Break up and reconciliation of different
  components or plan assets and return on assets.
• Expenses recognized in P L Account in different
  components.
• Main Actuarial assumptions used.

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AS 15(Revised 2005- Employees Benefit)

• Termination Benefits
• - To be Accounted for expenses immediately.
• - VRS is a termination benefit.
• - In case of VRS transitional provisions.

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AS 15(Revised 2005- Employees Benefit)

• Transitional provisions
• - Liability to be recognized as per revised
• AS-15 as on 01-04-2006, to be adjusted
• against revenue reserves.
• - Liability as per pre-revised AS- 15 shall
  be
• prior period expense.
• - VRS up to 31-03-2010 After that in the
  year
• of incurrence.

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T H A N K Y O U