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Changes to AASB 119 Employee benefits measurement and recognition
Employee benefits and changing Australian Accounting Standards
Deloitte has prepared a paper describing the main implications for employers arising from the revisions to the Accounting Standard AASB 119 Employee Benefits issued on 5 September 2011. The revised standard is applicable for reporting periods starting on or after 1 January 2013, unless adopted early.
The revisions to AASB 119 are expected to have greatest impact on employers’ measurement of employee annual leave liabilities. Secondly, significant impact is also expected for the measurement and recognition of defined benefit superannuation obligations for employers of those employees, including former employees where applicable.
Questions employers should now consider include:
- Early adoption: Should the employer adopt the revised AASB 119 earlier than the first reporting period starting in 2013? What implications would early adoption have (e.g. the treatment of any unrecognised actuarial gains and losses on transition to the new standard)?
- Annual leave: Will the nature of annual leave liabilities change from short-term to long-term employee benefits under the revised standard? If so, what impact will this have on the value of liabilities disclosed, and what assistance may the employer need to make this calculation?
- Defined benefit superannuation expense: For employer sponsors of defined benefit plans, what is the estimated impact on the superannuation expense disclosed in the employer’s income statement? What will be the impact on the retained profits position of the entity, given full recognition of deficit/surplus in the balance sheet under the revised standard?
- Superannuation benefit restructure: For employers considering a restructuring of their defined benefit arrangements, such as a defined benefit to accumulation transfer, will this be more or less attractive under the revised standard? As a result, should the employer bring forward or defer any benefit restructure?
For further information, please connect with your Deloitte contact or any of the contacts listed in the report.