Companies often ask us if an actuarial valuation mandatory for leave schemes. It is clear that accounting and audit professionals require some additional guidance on this matter. In this post, we aim at addressing this issue. The short answer is, an actuarial valuation will be applicable if your company offers leave benefits that would require […]
With the rise in start-ups in India, we are observing an increasing trend in share-based remuneration schemes to the employees, the most popular ones being ESOP and SAR. However, we have observed a gap amongst professionals and company personnel, in the knowledge of the different types of schemes and their accounting treatment. As such, in this […]
Introduction End of Service Benefits (EOSB) are a key component of employee compensation, particularly in Saudi Arabia and other neighbouring countries. Under IAS 19 – Employee Benefits, EOSB schemes are typically classified as defined benefit plans, requiring companies to recognise their obligations using the Projected Unit Credit (PUC) method. However, in certain cases, IAS 19 […]
Impact of COVID-19 on actuarial valuation COVID-19 pandemic has had a devastating impact on most businesses. One of the areas where companies have been hit hard is the cost of employee benefit schemes. Actuarial liabilities (Defined Benefit Obligation, DBO) have increased significantly, driven by a fall in discount rates. Apart from the adverse impact on […]
The adoption and implementation of IFRS in the Kingdom of Saudi Arabia (KSA) is a major step towards increasing the transparency and comparability of the financial statements of the companies doing business in the Kingdom. We receive a lot of queries from such companies regarding the impact of this change and the need for actuarial […]
We are often asked questions about what is the “duration of liability” and how it impacts the discount rate use in the actuarial valuation of gratuity and leave encashment. We try to cover a few of these questions in this article. What is duration of liability? Duration of liability can be defined in more than […]
Ind AS 102 will bring much needed uniformity in valuation and accounting of share-based benefits. However, the cost for the affected companies is likely to increase significantly. What Ind AS 102 is all about? Ind AS 102 prescribes financial reporting in respect of share-based benefits and is relevant for companies which remunerate their employees by share-based (or stock option) […]
Actuarial valuation and reporting of a pension scheme under IAS 19 is significantly more complex than other employee benefit plans. Several issues, which after often ignored, need to be understood and allowed for when reporting for pension schemes.
What are the factors that will have an impact on the actuarial valuation of gratuity liability? What will be the magnitude of this impact? How will the gratuity liability impacted if the government increases gratuity limit to ₹20 lakhs? These are questions about the actuarial valuation of gratuity which almost every company’s management team wants […]
During corporate transactions, such as mergers and acquisition, actuarial valuation of pension and other employee benefit schemes is often ignored. The parties involved in the transaction spend most of their time and focus on ‘tangible’ aspects of the balance sheet. They end up taking ‘shortcuts’ or proxy approaches with disastrous consequences for their shareholders. I […]