The aim is to bring the standard in line with its private-sector IFRS equivalent, IAS 19 Employee Benefits.
The new standard IPSAS 39, Employee Benefits, will replace IPSAS 25, Employee Benefits from 1 January, 2018.
The change will make life easier for governments whose departments account under IPSAS, but whose owned companies account under IFRS.
The update includes several key revisions. The new standard:
- Removes an options allowing an entity to defer the recognition of changes in the net defined benefit liability (known as “the corridor approach”).
- Introduces the net interest approach for defined benefit plans
- Amends certain disclosure requirements for defined benefit plans
- Simplifies the requirements for employee or third party contributions to a defined benefit plan when those contributions are applied to a simple contributory plan that is linked to service
- Removes the requirements for Composite Social Security Programmes.
According to a statement announcing the change, the first four amendments above reflect those made by the International Accounting Standards Board to its equivalent standard, IAS 19, up to December 2015. The final change is based on IPSASB’s conclusion that the section covering requirements of Composite Social Security Programmes was unnecessary in practice.
IPSASB chair Ian Carruthers, said: “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.”
He added: “The issuance of a new standard is intended to present the new accounting requirements more clearly.”
