Hi All,
IFRS 9 para 2.1(c) scopes out the following:
employers’ rights and obligations under employee benefit plans, to which IAS 19 Employee Benefits applies.
We commonly have accruals relating to employee remuneration and benefits on the balance sheet, relating to staff salary, bonuses, vacation pay, air-tickets and the like. These are normally paid within the next accounting cycle. Are these items covered by the term "employee benefit PLANS" and thereby scoped out of IFRS 9 ? Or do these constitute financial liabilities under IFRS 9, and are therefore included under the disclosures related to Liquidity Risk ?
No doubt, items such as Defined Benefit Plans and Defined Contribution Plans are scoped out, but what about the above ?
Employee Benefits and IFRS 9
Re: Employee Benefits and IFRS 9
Very good question.
IFRS 7 scopes out employer's rights and obligations arising from employee benefit plans (IFRS 7 o 3 (b)). It does not say anything about other employee benefits, so one could conclude that some of the benefits you are mentioning are financial liabilities under IAS 32 and would fall in the scope of IFRS 7 disclosures.
However, there was an IFRIC decision about this where it was concluded that: the exclusion of employee benefit plans from IAS 32 includes all employee benefits covered by IAS 19. Based on this, I think all employee benefits should be excluded from IFRS 7 disclosures.
https://www.ifrs.org/content/dam/ifrs/s ... r-2005.pdf
(Personally I am not sure if I agree if this makes sense from a liquidity risk analysis point of view, because these are expected cash outflows.)
IFRS 7 scopes out employer's rights and obligations arising from employee benefit plans (IFRS 7 o 3 (b)). It does not say anything about other employee benefits, so one could conclude that some of the benefits you are mentioning are financial liabilities under IAS 32 and would fall in the scope of IFRS 7 disclosures.
However, there was an IFRIC decision about this where it was concluded that: the exclusion of employee benefit plans from IAS 32 includes all employee benefits covered by IAS 19. Based on this, I think all employee benefits should be excluded from IFRS 7 disclosures.
https://www.ifrs.org/content/dam/ifrs/s ... r-2005.pdf
(Personally I am not sure if I agree if this makes sense from a liquidity risk analysis point of view, because these are expected cash outflows.)
Re: Employee Benefits and IFRS 9
Thanks DJP, I am of the same view, that these should be financial liabilities.
Just thinking aloud to justify this stance
....the IFRIC begins with the specific case of "long service leave", and goes on to refer to "other formal and informal arrangements". So long as these are benefit plans, one could hold the view that these may be scoped out ? But things like vacation pay, air tickets, bonuses, salary arrears can hardly be considered benefit plans, and so might be possible to continue disclosing them as part of financial liabilities.
Just thinking aloud to justify this stance
....the IFRIC begins with the specific case of "long service leave", and goes on to refer to "other formal and informal arrangements". So long as these are benefit plans, one could hold the view that these may be scoped out ? But things like vacation pay, air tickets, bonuses, salary arrears can hardly be considered benefit plans, and so might be possible to continue disclosing them as part of financial liabilities.
Re: Employee Benefits and IFRS 9
It would be challenging to determine an objective boundary for what should be considered a "plan". So the only reasonable approach IMO is to exclude all employee benefits that are in the scope of IAS 19. There are other items which will result in a cash flow and thus impact liquidity position but aren't covered by IFRS 7 liquidity disclosures (e.g. provisions, off-balance sheet commitments).
Re: Employee Benefits and IFRS 9
Thanks, yes that would be a good argument for exclusion.