AS-15( REVI SED 2005)

EMPLOYEES BENEFITS


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



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




AS-15 (REVI SED 2005- EMPLOYEES
BENEFI TS)
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.


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

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





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.


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.



AS 15(Revised 2005- Employees Benefit)
Post Employment Benefits

Defined Contribution Plans

Defined Benefit Plans

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.




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)


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 ?






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

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.


AS 15(Revised 2005- Employees Benefit)
Defined Benefit Plans
Expenses to be provided in P&l 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
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

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.



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.


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.

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.



T H A N K Y O U