- IAS 19 employee benefits describe the accounting treatment and employers’ requirement to disclose the employees’ benefits. Employees’ benefits after employment are divided into two categories which are defined benefit plans and defined contribution plans (Palepu et al, 2020). In defined contribution plans, the employer makes fixed payments to a fund which is a separate entity, and incase the fund is not in a position to pay the post-employment benefits to all the employees, the employer has no legal obligation to pay further contributions. The IAS 19 standard demands that the employer should make payments to a defined contribution plan when an employee has offered services to the company in exchange for the payments (Palepu et al, 2020). The only cost associated with this is the contributions made to the retirement benefit fund
Defined benefit plans on the other hand may be partially, wholly funded or they may be unfunded. IAS 19 requires the employer to account for its legal commitments as well as any other tangible obligation which may result from the employers’ practices (AREAS, 2018). The entity is required to establish the present worth of the defined benefit contributions and the fair value of the assets attributed to the plan. The employer should use forecasted unit credit criteria to estimate their obligations and costs. The employer is required to match benefits to the period the employee served under the benefit plan arrangement except when the employees’ service in later years will yield a materially increased level of benefits compared to preceding years (AREAS, 2018).
Under defined benefit arrangement the employer is obliged to make unbiased and mutually consistent assumptions concerning demographic elements. The assumptions ought to be on basis of market expectations prevailing at the end of the reporting period (de Assis et al, 2017). The discount rate ought to be established based on the market performance on high-value corporate bonds or according to currency value terms compatible with the currency and terms of the post-employment benefit requirements. The carrying amount of net defined benefit assets should be limited to ensure that go beyond the economic benefits at disposal in terms of refunds from the plan or a decrease in future payments to the plan (de Assis et al, 2017). All changes in the net defined benefit plan ought to be captured in terms of cost of service and net interest in profit or loss and revaluations in other comprehensive incomes.
- Essential requirements for adequate pension fund disclosure
Entities ought to disclose information about characteristics of the defined benefit plans that users of financial information can clearly understand what they entail and the investment the entity has made towards the defined benefit plan (de Assis et al, 2017). A disclosure should be made on the amounts captured in the financial statements attributable to the defined benefit plans. IAS 19 describes that it is important to disclose how involvement in defined benefit plans impacts the amount, timing and uncertainty of the entity’s cash flows in the future. Additional information should be provided about the risk explore involved, the distinction between actuarial gains and losses as a result of demographic and financial assumptions should be disclosed and also it is necessary to significant assumptions made (Judge et al, 2019).
- B) According to the Turks and Caicos ordinance, the employees are entitled to holidays and holiday compensation sufficient to enable them entitlement to accrued holiday pay to be well calculated in an event that an employee is terminated from work (Judge et al, 2019). The employees are entitled to pension and pension schemes. The ordinance stipulates that in an event that an employer after giving contact to the employee, changes their name without a change in identity or if the identity is changed in a way that the employees’ employment period is not altered and does not involve the employee then the change would be treated as a breach of contract and ought to pay for stipulated damages (Judge et al, 2019).
The ordinance benefits the employee by explaining the continuity of employment in a way that the employer cannot just terminate the job without a valid reason. Where an employee is a woman, she will be entitled to a maternity leave of fourteen weeks upon presentation of a doctor’s report on her due date (Vogel, 2020). It also stipulates that an employee is entitled to get a pay statement containing the details of the gross pay consisting of wages and salaries, deductions and net pay so that the employee may cross-check and raise any concerns they might be having. The employees are also entitled to compassionate leaves with pay for three days in an event of the death of his or her spouse child-parent or any other closely related person (Vogel, 2020).
Employees are entitled to a vacation leave with pay which is equivalent to two weeks every year worked for the employer. This ordinance also gives the employees the benefit of sick leaves with pay on workdays that he is deemed sick and the sick leave is taken only in connection with a particular sickness confirmed by a doctor in writing (Vogel, 2020). Another benefit to employees is the fact that they are entitled to severance pay in an event that they have been employed for a period of two years and the employer resolves to dismiss them on grounds of redundancy, or when the employee is laid off or maintained on short time without permanent confirmation, then the employer is required to pay them a severance pay (Vogel, 2020).
The ordinance also stipulates that the employee is under protection against unlawful discrimination as it tries to promote and recognize the attribute of fair opportunities and treatment in employment or other related organizations. The ordinance also protects employees against any sexual harassment by the employer, any member of the managerial team or a co-worker constitutes unlawful discrimination on basis of sex. The ordinance also talks about the promotion of equal remuneration to both men and women employees without discrimination on the basis of gender or age (Palepu et al, 2020). It requires that each employee be compensated on basis of performance and ability and not on a discriminative basis of sexual orientation or age
AREAS, B. (2018). Financial analysis. growth, 30, 10.
de Assis, C. A., Houtman, C., Phillips, R., Bilek, E. M., Rojas, O. J., Pal, L., … & Gonzalez, R. (2017). Conversion economics of forest biomaterials: risk and financial analysis of CNC manufacturing. Biofuels, Bioproducts and Biorefining, 11(4), 682-700.
Judge, F., McAuliffe, F. D., Sperstad, I. B., Chester, R., Flannery, B., Lynch, K., & Murphy, J. (2019). A lifecycle financial analysis model for offshore wind farms. Renewable and Sustainable Energy Reviews, 103, 370-383.
Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and valuation: Using financial statements. Cengage AU.
Vogel, H. L. (2020). Entertainment industry economics: A guide for financial analysis. Cambridge University Press.