1. PricewaterhouseCoopers IAS 19 Employee benefits

2. PricewaterhouseCoopers Objectives and scope Accounting and disclosure of Short term employee benefits Post employment benefits Other long term employee benefits Termination benefits

3. PricewaterhouseCoopers Short term employee benefits Definition Examples Accounting treatment

4. PricewaterhouseCoopers Short term compensated absences Accumulating Non-accumulating Definitions

5. PricewaterhouseCoopers Profit sharing and bonus plans Legal or constructive obligation Reliable estimate Within 12 months

6. PricewaterhouseCoopers Post employment benefits Defined contribution plans Defined benefit plans

7. PricewaterhouseCoopers Defined contribution plans Expense when due Disclosure Accounting Treatment

8. PricewaterhouseCoopers Post retirement benefits-defined benefit plans Value on balance sheet FV of scheme assets X PV of liabilities (X) Actuarial gains/losses not yet recognised (X)/X Past service costs not yet recognised X X Components of change in value accounted for separately

9. PricewaterhouseCoopers Determining the value of plan assets Fair value? Market price if available No market price? Use estimate

10. PricewaterhouseCoopers Benefits earned - Projected Unit Credit Method Example A new employee has current salary of £50,000, expected to increase at a rate of 4% per annum over the next 5 years. The employee is a member of the firm’s defined benefit scheme, and is entitled to a lump sum on retirement (expected to be in 5 years) of 2% of final salary for each year of service. A discount rate of 5% is applied. Calculate the obligation at the end of each year

11. PricewaterhouseCoopers Calculations Salary at end of year 5 £50,000 x 1.04 5 =£60,833 Benefit attributable to each year £60,833 x 2%=£1,217

12. PricewaterhouseCoopers Calculations (continued) Benefits attributable to years 1-5 Year12345 Benefit attributed to - Prior years01217243436514868 - Current year1217 Current and prior years12172434365148686085

13. PricewaterhouseCoopers Calculations (continued) Year 3 example Present value of obligation at end of year 3 £3,651 1.05 3 = £3,154 Present value of obligation at end of year 2 £2,434 1.05 2 = £2,208 £946 £110 £836 Movement Interest cost Service cost (balance)

14. PricewaterhouseCoopers Recognition in the income statement Current service cost Interest cost Expected return on plan assets Actuarial gains and losses (to the extent they are recognised) Past service costs (to the extent they are recognised)

15. PricewaterhouseCoopers Service cost Current Due to employee working extra year Past Due to change in benefits

16. PricewaterhouseCoopers Interest cost Unwinding of discount Expected return Use long term rate

17. PricewaterhouseCoopers Actuarial gains and losses Experience adjustments Changes in assumptions Recognition 10% ‘corridor’

18. PricewaterhouseCoopers Disclosure for defined benefit schemes Accounting policy Description of plan Reconciliation of assets and liabilities in the balance sheet Fair value of plan assets Reconciliation of movement in liabilities Breakdown of income statement expense Actual return on plan assets Actuarial assumptions

19. PricewaterhouseCoopers Multi-employer plans Defined benefit Defined contribution Disclosures

20. PricewaterhouseCoopers Other long term employee benefits Examples Recognition and measurement Disclosure

21. PricewaterhouseCoopers Termination benefits Obligation to pay Demonstrably committed Discounting disclosure