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AS15 REVISED 2005 EMPLOYEES BENEFITS

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Provident Fund - Medical Facilities. AS 15(Revised 2005- Employee's Benefit) ... e.g. Provident Fund. - On Retirement Employee gets : Accumulated. Contribution and ... – PowerPoint PPT presentation

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Title: AS15 REVISED 2005 EMPLOYEES BENEFITS


1
AS-15( REVISED 2005) EMPLOYEES BENEFITS
  • PRESENTED By
    -

  • Dr. RAJ. K. AGARWAL

  • FCA,FCS,AICWA,LLB, Phd.


    RAKESH RAJ ASSOCIATES

2
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

3
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.

4
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

5
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

6
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.

7
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.

8
AS 15(Revised 2005- Employees Benefit)
  • Post Employment Benefits
  • Defined Contribution Plans
  • Defined Benefit Plans

9
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.

10
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)

11
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 ?

12
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

13
  • 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.

14
  • 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

15
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

16
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.

17
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.

18
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.

19
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.

20
T H A N K Y O U
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