IFRS Roundtable Discussions

1. IFRS Roundtable Discussions IAS19 – Employee Benefits Holiday Pay Neil O’Grady 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