IFRS ā€“ IAS 19: Employee benefits

The International Accounting Standards Committee (IASC) released International Accounting Standard 19 (IAS 19) to address the topic of accounting for employee benefits by the employer.

With the various types of benefits which are available to employees and the volume of employees a company can potentially have, it is important that they are accounted for correctly.

Generally, the concept is that the entity must record a liability for those benefits it must payout in the future. When these benefits are paid out or rendered, the company must then record an expense. This standard then gives more specific guidance on the following types of benefits:

  • Short Term Employee Benefits
  • Post-Employment Benefits
  • Other Long Term Employee Benefits
  • Termination Benefits

IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.

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