IFRS Roundtable Discussions

1
IFRS Roundtable Discussions

• IAS19 Employee Benefits
• Holiday Pay
• Neil OGrady
• Department for Communities and Local Government

2
Employee Benefits

• IAS 19 Employee Benefits
• Worked Example impact on accounts
• Issues to consider
• Conclusion
• Discussion

3
Employee Benefits

• Objective of IAS 19
• To prescribe the accounting and disclosure for
  employee benefits - that is all forms of
  consideration given by an enterprise in exchange
  for the service rendered by employees.
• The principle underlying all of the detailed
  requirements of the Standard is that the cost of
  providing employee benefits should be recognised
  in the period in which the benefit is earned by
  the employee, rather than when it is paid or
  payable.

4
Employee Benefits

• How would this apply in your Accounts?
• Worked example
• If a member of staff brought forward, at the
  start of the year, 5 days leave allowance, and
  carried forward 3 days at the year end, and their
  total staff cost was 40,000.
• The b/fwd creditor (i.e. the organisation owes
  the member of staff 5/260 x 40,000 769.
• The c/fwd creditor is 3/260 x 40,000 462.
• The expense in the year would be 39,693.

5
Employee Benefits

• Considerations
• Materiality
• Logistics

6
Employee Benefits

• Considerations - Materiality
• In CLG, staff costs in 2006-07 were 263m out of
  total gross spend of 34,213m (0.77). This could
  be very different in an NDPB.
• Will the potential omission or misstatement
  influence a decision by a user relying on the
  information in the accounts?

7
Employee Benefits

• Considerations - Logistics
• Paper-based/Database of leave records
• Different/Same leave year-ends
• Numbers of staff

8
Employee Benefits

• Conclusion/Discussion
• Accounting treatment has to consider the
  cost/benefit of obtaining the information, taking
  into account the materiality.
• For CLG, the conclusion is to not adjust staff
  cost expenditure for Holiday pay.

9
Employee Benefits

• Questions and Discussion