Accounting & Disclosure for Employee Benefits

in Compliance of Accounting Standard (AS) 15 (revised 2005)

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• Accounting Standard (AS) 15 (revised 2005) is issued by the Institute of Chartered Accountants
of India and is mandatory in nature (refer to the text of the standard for details).

• The objective of the standard is to prescribed accounting and disclosure for employee benefits.
The statement requires an enterprise to recognize:-

o A liability when an employee has provided service in exchange for employee benefits to
be paid in the future; and
o An expense when the enterprise consumes the economic benefit arising from service
provided by an employee in exchange for employee benefits.

• Employee Benefits fall under 2 type of plans:- Defined Contribution Plans and Defined Benefit
Plans.

• Employee Benefits are further classified as:-

o Short Term Employee Benefits

o Post Employment Benefits such as Gratuity, Pension, Other Retirement Benefits, Post-
Employment Life Insurance and Post-Employment Medial Care;
o Other Long-Term Employee Benefits, including long-service leave or sabbatical leave,
jubilee or other long-service benefits, long-term disability benefits and, if they are not
payable wholly within twelve months after the end of the period, profit-sharing, bonuses
and deferred compensation; and
o Termination Benefits

Because each category identified above has different characteristics, this statement
establishes separate requirements for each category.

• Accounting and Disclosure requirements for Defined Benefit Plans need the skill of an Actuary.

• Most common Defined Benefits relevant in the Indian context which need the services of an
actuary for compliance of the accounting standard, whilst finalizing the financial statements are:-

o Gratuity
o Compensated Absences (Earned Leave)
o Compensated Absences (Sick Leave)
o Post Retirement Medical Benefits
o Superannuation (Pension Benefits)

• Frequent items to be conversant with the subject are:-

o Projected Unit Credit Method (PUC)

o Present Value of Obligation
o Current Service Cost
o Interest Cost
 o Actuarial Gains/Losses
o Employer’s Expense
o Experience Adjustment on Plan Liabilities
o Experience Adjustment on Plan Assets

• *We provide actuarial services for compliance of the standard. We have expertise, experience and
in-depth knowledge in this field. We have a large clientele spread in almost all sectors of the
economy in Public and Private Sectors including Multinational Companies, Limited Companies,
Schools, Hospitals, Banks, Electricity/Power Companies etc. etc.

• Our services are also available for compliance of :-

o International Accounting Standard IAS (19) - IFRS

o Under US GAAP

For more details log on to www.mlsodhiactuary.com