IASB: Improvements to the accounting for post-employment benefits
16 June 2011
The IASB announced the completion of its project to improve the accounting for pensions and other post-employment benefits by issuing an amended version of IAS 19 Employee Benefits.
The amended version of IAS 19 comes into effect for financial years beginning on or after 1 January 2013. Earlier application is permitted.
The amendments make important improvements by:
- eliminating an option to defer the recognition of gains and losses, known as the ‘corridor method’, improving comparability and faithfulness of presentation;
- streamlining the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring remeasurements to be presented in other comprehensive income (OCI), thereby separating those changes from changes that many perceive to be the result of an entity’s day-to-day operations; and
- enhancing the disclosure requirements for defined benefit plans, providing better information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans.
The amendments will provide investors and other users of financial statements with a much clearer picture of an entity's obligations resulting from the provision of defined benefit plans and how those obligations will affect its financial position, financial performance and cash flow.
The project also formed part of the Memorandum of Understanding (MoU) between the IASB and the FASB, the US national standard-setter. The elimination of the corridor method further aligns IFRSs and US generally accepted accounting principles (GAAP).
Press release
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