The International Accounting Standards Board (IASB) has issued an exposure draft in which proposes limited amendments to IAS 19 Employee Benefits.
The proposed amendments affect the accounting treatment of contributions from employees and third parties to defined benefit plans.
IASB said in a statement the objective is to offer a simpler guidance "when the contributions payable in a particular period are linked solely to the employee’s service rendered in that period".
As a concrete example of areas subject to change, IASB referred to the accounting for employee contributions that are calculated according to a fixed percentage of salary.
IASB is proposing that such contributions could be recognised "as a reduction in the service cost in the same period in which they are payable" but only if they are exclusively linked "to the employee’s service rendered in that period".
The proposed amendment creates an exemption to the principle established by IAS 19. According the standard 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.
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The deadline to comment on IASB’s exposure draft is 25 July 2013