The Hindu Business Line : Applicability date for revised accounting norms on employee benefits under review

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Applicability date for revised accounting norms on employee benefits under review

K.R. Srivats

New Delhi , Jan. 26

THE date of applicability of the revised accounting standard on `employee benefits' is under review.

A technical glitch may compel the Institute of Chartered Accountants of India (ICAI) to abstain, for the time being, from specifying the date of applicability of the revised accounting standard (AS-15) on `employee benefits'.

The ICAI council had, early this month, cleared the revised AS-15. While the existing AS-15 deals only with retirement benefits, the revised AS-15 is to be made applicable to accounting for all employee benefits except employee share-based payments. The disclosure requirements of revised AS-15 are significantly elaborate as compared to the existing AS-15.

The institute had, in the first week of January 2005, announced that the revised AS-15 would be mandatory for all large enterprises (primarily listed enterprises, enterprises with turnover of more than Rs 50 crore and enterprises having borrowing of more than Rs 10 crore) from April 1, 2006.

"The applicability date is again under consideration on account of a technical reason. We have now circulated a separate resolution on the issue of applicability of the revised standard," Mr Sunil Goyal, President of ICAI, told Business Line.

Indications are that the institute may wait for the Government to take a call on ICAI's accounting standards (1-23) before specifying a date for applicability of revised AS-15.

The National Advisory Committee on Accounting Standards has already recommended ICAI's AS 1-23 to the Central Government for their notification as "accounting standards" under the Companies Act.

The main issue is that existing AS-15 is one of the standards that is already under the consideration of the Government for notification as an accounting standard under the Companies Act.

"In such a scenario, any move on part of the ICAI to issue revised standard of AS-15 with specified date of applicability would only send confusing signals to users of accounting standards. The institute may prefer to wait to see what the Government does before spelling out the date of applicability of the revised standard," sources said.

The employee benefits to which the revised AS-15 would be applicable include short-term employee benefits such as wages, salaries, bonuses etc; post-employment benefits such as pensions, gratuity etc; long-term employee benefits (such as long-service leave and sabbatical leave) and termination benefits (including VRS expenditure).

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