IAS 19 is extensive

You may want to download the IAS 19 pdf from the source (requires site registration). We do not keep the pdf on our site, as the copyright issues are unclear. This document consists of 52 pages and 178 paragraphs.

We will provide a comprehensive service to meet your IAS 19 or ASC 715 needs.

What is IAS 19?

IAS 19 is the International Accounting Standard governing employee benefits accounting requirements. Under IAS 19, long-term employee benefits, such as end of service gratuity benefits, require an actuarial valuation.

What is an IAS 19 actuarial valuation?

An IAS 19 actuarial valuation is an assessment of a company’s current and future long-term employee benefit liabilities. To complete this valuation, an agreed set of financial and demographic assumptions are used. These are based on the actuary’s best estimates, preferably supported by historical data. The data and assumptions are applied in a particular actuarial valuation model, the Projected Unit Credit or PUC model.

An IAS 19 actuarial valuation requires skilled personnel, both in terms of qualification and in specific experience and application, to meet the stringent reporting requirements.

Why conduct an IAS 19 valuation?

It is important for companies to understand their end of service gratuity liabilities and to determine whether they are under or over accruing for these employee benefit obligations. It is also important to understand the impact these liabilities will have on a company’s future cash flow.

Does IAS 19 apply to all countries and companies?

Any company or entity that chooses to meet IFRS disclosure requirements will have to comply with IAS 19 as one of the underlying requirements. Adhering to IFRS may be mandated by government, company Head Office, your auditor, a desire to commit to global financial reporting standards in order to access world and credit markets, or as a matter of best practice.

How does Lux’s process work?

We will:

  • Collect, analyse, reconcile and validate employee payroll data,
  • Engage with the Finance/Management team to set the valuation basis,
  • Calculate the actuarial cost of liabilities,
  • Conclude and make recommendations to Senior Management,
  • Present an extensive actuarial report within a few working days

What does the report show?

Our actuarial report, which is fully compliant with the Institute and Faculty of Actuaries’  professional standards (IFoA – London, UK) sets out the following:

  • Data: summary employee statistics
  • Assumptions: we set out the impact and materiality or significance of each of our assumptions (demographic and financial)
  • Methodology: we detail our approach in reaching the results, in accordance with IAS 19
  • Results: we set out the figures you should use in the year-end financials, in an easy-to-understand format, directly transferable to your financial statements
  • Future year expected cost, for budgeting and planning purposes
  • Projections: we roll forward the results and provide a projection of estimated benefits versus expected future cash flows over the remaining lifespan of the benefits scheme, for use in your longer-term budgeting process.
  • Cost and liability figures broken down to individual employee level, in Excel format

How does Lux make your work easier?

We take the burden away by undertaking the actuarial valuation on behalf of your company and preparing the report in an easy-to-use format.

What are the advantages of conducting an IAS 19 actuarial valuation?

A company’s adoption of IFRS, including IAS 19, ensures its financial statements are uniform and comparable to its peers.

By commissioning an IAS 19 actuarial valuation it helps companies to understand their employee benefit obligations and determine whether they are under-or over-accruing for the provision. Such an exercise also serves to identify intrinsic risks and associated mitigating actions.

What other employee benefits services does Lux offer?

We offer more than actuarial reporting. As employee benefit specialists we are well equipped to provide our clients with a number of value-added services, including:

  • Validation of internal accounting calculations and reporting
  • Advice on scheme design, to reward employees via contributory savings or bonus awards
  • Guidance on scheme governance and how to mitigate the risks associated with employee benefit liabilities, including funding solutions
  • Cost/Benefit analysis of introducing an employee benefits scheme, based on different scenarios
  • Advice on asset/liability matching and risk-reducing strategies
  • Employee payroll data audits, to verify accuracy and completeness
  • Employee communications, including scheme booklets and total reward statements