ASCA Jordan

 

New York, The International Public Sector Accounting Standards Board® (IPSASB®) has published IPSAS® 39, Employee Benefits, which will replace IPSAS 25, Employee Benefits, on January 1, 2018, with earlier adoption encouraged.

 

This limited-scope project was part of the IPSASB’s strategy to maintain its existing standards, including updating them for relevant changes made to the equivalent International Financial Reporting Standards (IFRS). The main differences between IPSAS 39 and IPSAS 25 are:

• Removal of an option that allowed an entity to defer the recognition of changes in the net defined benefit liability
   (the “corridor approach”);
• Introduction of the net interest approach for defined benefit plans;
• Amendment of certain disclosure requirements for defined benefit plans and multi-employer plans;
• Simplification of the requirements for contributions from employees or third parties to a defined benefit plan when those contributions are applied to a simple contributory plan that is linked to service; and
• Removal of the requirements for Composite Social Security Programs.

The first four changes above reflect those made by the International Accounting Standards Board to its equivalent standard, International Accounting Standard (IAS) 19, Employee Benefits, up to December 2015. The fifth change, removal of the Composite Social Security Programs section, reflects the IPSASB’s conclusion that the section was unnecessary in practice.

 

Exposure Draft (ED) 59, Amendments to IPSAS 25, Employee Benefits, proposed significant changes to IPSAS 25 to converge with IAS 19. After considering constituents’ responses and a revised version of IPSAS 25, the IPSASB decided to issue a new standard, IPSAS 39, which reflects the revisions proposed in ED 59 in a more user-friendly format.

 

“IPSAS 39, Employee Benefits, ensures that financial statements provide faithfully representative and relevant information about the financial impact of employee benefits, particularly defined benefit pension plans, while maintaining convergence with IFRS,” said IPSASB Chair Ian Carruthers. “The issuance of a new standard is intended to present the new accounting requirements more clearly.”

 

An At-a-Glance summary of IPSAS 39 is also available.