Detailed Report on Accounting for Employee Benefits Under AASB 119

This report provides a detailed overview of accounting for employee benefits in accordance with AASB 119. It covers the objective, application, and scope of the accounting standard, emphasizing the recognition of liabilities and expenses related to employee benefits. The report distinguishes between short-term and post-employment benefits, including defined contribution plans and defined benefit plans, outlining the accounting treatment for each. It also addresses the importance of adhering to the Corporation Act and preparing general-purpose financial statements. Furthermore, it discusses the criteria for recognizing employee benefits, such as contractual obligations and informal practices that create obligations for the entity. The analysis is supported by references to AASB standards, ensuring a comprehensive understanding of the accounting requirements for employee benefits.

JMD1491 ACCOUNTING
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Objective, Application, and Scope
Accounting standard AASB 119 is being followed for the purpose of the measurement and
accounting of the Employee Benefits. The recognition of the liability is to be considered by the
entity if any services are being rendered by the employee towards the employee benefit and also
when there are any expenses incurred due to the suppression of the employee benefits by the
entity. The entity needs to follow the Accounting standard and imply the financial reports of the
entity are being prepared with respect to the Corporation act and if the financial statements are
being general purpose financial statements as well as of reporting entity (AASB Standards,
2011). The standard is to be followed by the employer in calculating the employee benefits but
not for those for which there is the application of AASB 2 Share-based payment applies.
The standard consists of the following:-
 The contract has been established between the employee or the group of employees and
Employer or the one representing.
 To meet the statutory and legislation obligation as enforced.
 Any practices which have resulted in the obligation because of its informal nature that
may hamper the relationship with the employees of the company and left no chance for
the entity except providing the employee benefits.
Employee benefits consist of the following:-
 Short-term benefits at the end of reporting period if to be settled within the time frame of
12 months for the services provided such as salaries and wages, payment of the leaves
taken due to any sickness or annual leave allowed, sharing of the profit that is being
earned and the benefits which are non-monetary such as the housing, car expenses.
 Benefits that are being provided after the employment such as the pensions or payment
on lump sum basis or the benefits related to the health such as life insurance or medical
care (AASB Standards, 2011).
 The long-term service benefits or benefits provided at the time of long-term leaves and
benefits provided due to any disability.
 Benefits provided at the time of termination of the employees.
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 The benefits which are provided to employee itself as well as to their family members,
beneficiary or dependents directly or to others on behalf of the employee.
Different types of Employee benefits are:-
Short-term Employee benefits
The short-term benefits can be referred to which are going to be settled within the 12 months of
reporting period such as the wages etc. If there is a change in the period of the benefit and
increased more than 12 months than it is necessary to reclassify those short-term benefits. The
recognition of the employee benefit is based on the time period in which the services are being
provided (AASB Standards, 2011). The undiscounted amount is to be recognized which is to be
provided with respect to the service that is being provided, any accrued expenses must be
deducted from the undiscounted amount and if it is more than the undiscounted amount then it
must be deducted from the future payments. All the other expenses are also to be identified
except the expenses incurred as per AASB 116 and AASB 102 (AASB Standards, 2011).
Post-employment benefits: the distinction between defined contribution plans and defined
benefit plans
The Post benefit plans can be categorized as the contribution plans or defined benefit plans based
on the principles. The post-employment benefit consists of the benefits of the retirement such as
any policies and payment made in lump sum or a pension. It is important that the benefits must
be provided as it is decided but there are examples when there can be change in the obligation
and not limited to agreed amount such as insufficiency to meet the obligation, guarantee of an
amount, any informal practices that can result in providing of return to the employees (AASB
Standards, 2011).
Post-employment benefits: defined contribution plans
The defined contribution plans are straightforward as it is based on the amount that is going to
contribute to the employer without consideration of any actuarial assumptions. The basis of
settlement is expected to be not more than 12 months thereby making the amount to be
considered on an undiscounted basis (AASB Standards, 2011).
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References
 AASB Standards, (2011). Employee Benefits. Australian Government. [Online]. Also
available at http://www.aasb.gov.au/admin/file/content105/c9/AASB119_09-11.pdf.
[Accessed on 07-06-2018]
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