HI6025 - Employee Benefits Accounting: IAS 19 Analysis & Implications

This report provides a comprehensive analysis of accounting for employee benefits in accordance with IAS 19 Employee Benefits, highlighting the different types of benefits such as short-term, long-term, post-employment, and termination benefits. It references two journal articles, one comparing IFRS with other accounting standards in Greece and the other focusing on discretionary accounting choices in pension accounting across the UK, France, and Germany. The report discusses the purpose and research questions of each article, noting similarities in analyzing listed companies and promoting IFRS transparency, and differences in focusing on overall employee benefits versus pension-specific treatments. Key findings include the suitability of IFRS for accounting benefits and the appropriate adoption of discretionary choices in pension accounting. The implications of these articles are that accountants become aware of IFRS application, regulators understand the early adoption of equity methods, and investors are informed about IFRS adjustments and discretionary choices.

Accounting for
Employee Benefits

Introduction
•Accounting for Employee Benefits is done in
accordance with IAS 19 Employee Benefits.
•The benefits means the services given to
employees in exchange of their contribution.
•Types of benefits are short term, long term,
post employment and termination benefits.

IAS 19 – Employee Benefits
 It issued in 2011 supersedes the old IAS 19
(1998).
 The standard provide provisions which are
to be followed by every entity to account for
benefits.
 According to it, the companies has to
recognize the cost of providing benefits in
the same period in which the benefit is
earned by the employee.

 Article 1: A comparative analysis for the
accounting reporting of ‘employee benefits’
between IFRS and other accounting
standards: a case study for the biggest
listed entities in Greece.
 Article 2: Discretionary accounting choices:
the case of IAS 19 pension accounting.
Journal articles

 It provide insights about the accounting of
employee benefits as per the international
standards.
 It compares between IFRS and other
accounting standards such as Greek GAAP.
 The article was mainly focused on finding
the right accounting treatment for
employee benefits.
 It explains the different benefits available to
the employees.
Reasons for selecting
article 1

 It completely focus on the concept of
pension accounting.
 It suggest the treatment of defined benefit
pension plan as per the two discretionary
choices adopted by the companies.
 It provide insights about the early adoption
of equity method and presentation of
interest cost in the financial statements.
Reasons for selecting
article 2

Article 1
 The aim is to illustrate a comparative
analysis between IFRS and accounting
standards in respect of accounting for
employee benefits.
 The question sets out by the study is to
analyze the differences and similarities
between the various accounting
standards.
Purpose and research
question

 Another question addressed was to
measure the extend to which the
employee benefits are reported in the
financial statements.
 It identifies the problems faced by 20
elected companies at time of
implementing IAS 19.
Purpose and research
question

Article 2
 The purpose is to study the way in which
companies operating in UK, France and
Germany uses two discretionary choices.
 The question sets out by the research
article is to analyse the decision of
voluntarily adopting the equity method and
presenting interest expense and related
income in the financial statements.
Purpose and research
question

 Both articles have analyzed the listed
companies operating in different countries.
 The findings of articles suggested that all
the companies should properly follow the
framework of IFRS and provisions of IAS for
accounting the employee benefits.
 It has been found that IFRS brings more
transparency in the system.
Similarities in the findings

 Article 1 was focused on comparing IFRS
with other accounting standards.
 Article 2 findings suggested the accounting
treatment for pension benefits available for
employees.
 The findings of study 1 explains the concept
of employee benefits as whole.
 The findings of second study was focused
only on choices adopted for pension
accounting.
Differences in the findings

 Both the articles were focused on the fact
accounting for employee benefits
conducted in various companies.
 The findings suggested that adoption of
IFRS is prove to be more suitable for
accounting the benefits.
 In addition, the two choices made by the
companies of France, UK and Germany are
in accordance with IASB arguments and are
the appropriate methods.
Findings of the articles