ICAI Issued Exposure draft of new AS 19, Employee Benefits issued in line with Ind AS

ICAI has issued exposure draft of new Accounting Standards (AS); AS 19,Employee Benefits. The Standard is in line with Ind AS 19 with the same name. The requirements of proposed AS 19 and Ind AS 19 are similar, except that small & medium-sized entities have given relaxation from application of certain provisions of AS 19 and certain disclosure requirements of Ind AS 19 are not included in AS 19. Appendix B,The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interactionof Ind AS 19 has not been included in AS 19.
The major differences between AS 19 and AS 15 are as follows:

1. In AS 19, employee benefits arising from constructive obligations are specifically covered whereas AS 15 does not specifically covers the same. (Paragraph 4(c) of AS 19).
2. The term employee includes directors in AS 19 whereas under AS 15 employee includes whole-time directors.
3. Definitions of short-term employee benefits, other long-term employee benefits and past service cost as per AS 15 have been changed in AS 19. (Paragraph 8 of AS 19).
4. Paragraph 37 of AS 19 deal with situations where there is a contractual agreement between a multi-employer plan and its participants that determine how the surplus in the plan will be distributed to the participants (or the deficit funded). AS 15 does not deals with the same.
5. Paragraph 42 of AS 19 provides that participation in a defined benefit plan sharing risks between various entities under common control is a related party transaction for each group entity and some disclosures are required in the separate or individual financial statements of an entity. AS 15 does not contain similar provisions.
6. AS 19 encourages, but does not require, an entity to involve a qualified actuary in the measurement of all material post employment benefit obligations whereas AS 15 though does not require involvement of a qualified actuary, does not specifically encourage the same. (Paragraph 59 of AS 19)
7. AS 19 requires recognition of actuarial gains and losses in other comprehensive income. AS 15 requires recognition of actuarial gains and losses immediately in the profit and loss.
8. Paragraph 80 of AS 19 makes it clear that financial assumptions shall be based on market expectations, at the end of the reporting period, for the period over which the obligations are to be settled. AS 15 does not clarify the same.
9. Paragraph 83 of AS 19 provides that subsidiaries, associates, joint ventures and branches domiciled outside India shall discount post-employment benefit obligations arising on account of post-employment benefit plans using the rate determined by reference to market yields at the end of the reporting period on high quality corporate bonds. Under AS 15, rate used to discount post-employment benefit obligations is determined by reference to market yields at the balance sheet date on government bond.
10. Under AS 19, there is a concept of assets ceiling, i.e., net defined benefit liability (asset) is adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. AS 15 does not have such concept.
11. Paragraph 165 of AS 19 provides guidance for timing of recognition of termination benefits. No guidance is available under AS 15.

The exposure draft is open for comments till August 10, 2018. To downloadExposure draft of new AS 19 click here
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