PSAK 24 (EMPLOYEE BENEFITS)

PSAK 24 (EMPLOYEE BENEFITS)

Monday, September 22nd, 2014

PSAK 24 (Revised 2013)

PSAK24-gbr-Padma-Radya-Aktuaria-Konsultan-Aktuaria-Actuary-Consulting-In-Indonesia

In December 2013 ago, the Financial Accounting Standards Board (DSAK) Indonesian Institute of Accountants has endorsed PSAK 24 (Revised 2013). This statement replaces PSAK No. 24 (2010) : Employee Benefits.

PSAK 24 Revised 2013 is being adopted from IAS 19 Revised 2011 and will be applied to the period of the financial year beginning on or after January 1, 2015.

The two biggest differences with PSAK No. 24 (2010) are :

[1] Measurement and Assumptions : There is no significant change, but the assumption is set in more detail.

[2] Recognition : No more component changes Present Value of Liabilities which may be amortized or deferred recognition.

In PSAK 24 Revised 2010, there are still two components that changes Present Value of Liabilities (which allowed) to be amortized or deferred from recognition, whereby in the PSAK 24 Revised 2013 they were not.

 

PSAK24-gbr1-Padma-Radya-Aktuaria-Konsultan-Aktuaria-Actuary-Consulting-In-Indonesia

 

[3] Persentation : Restructuring Expense Components.

In PSAK 24 (2013), component load is divided into three major parts :

  • Cost of services (Service Cost).
  • Net interest on liabilities (assets) net defined benefit (net interest income/ expense).
  • Measurement of return on liabilities (assets) net defined benefit (Remeasurement).

The components of the load on the version of PSAK 24 (2010), for example: Current Service Cost, Profit / Loss Actuarial, etc, will be put into 3 parts and there is a large cost component is melted (ie : Past Service Cost and Impact of Curtailment, or Interest Costs with Results Expected Return on Plan Assets).

To Fees and Net Interest Income is recognized entirely on, while the components Measurement Back recognized in Other Comprehensive Income as presented in the illustration below :

 

PSAK24-gbr2-Padma-Radya-Aktuaria-Konsultan-Aktuaria-Actuary-Consulting-In-Indonesia

 

[4] More complex disclosures.

Company must disclose information :

  • Describe the characteristics of defined benefit plans and the risks associated.
  • Identify and explain the amount arising from the program in the financial statements.
  • Describes how the programs impact on the amount, time and uncertainty of future cash flows (Sensitivity analysis; Description of the strategy for assets and liabilities matching; Indication of the impact of benefit plans on the future cash flows of the entity (the maturity profile of the defined benefit obligation)).

 

Impacts on Application

PSAK 24 (2013) came into force January 1, 2015, but earlier application is not permitted. Companies must apply this new standards retrospectively in accordance with PSAK 25; Accounting Policies, Changes in Accounting Estimates and Errors except that :

  • An entity need not adjust the carrying value of assets outside the scope of this Standard for changes in employee benefits expense included in the carrying amount before the date of initial applications.
  • In the financial statements for periods beginning prior to January 1, 2016, an entity need not present comparative information for the disclosures about the sensitivity of the defined benefit obligation.

The impact of the application can be seen in the components “Costs are still to be recognized/ Unrecognized” in numbers obligations, which consist of Past Service Cost Unrecognized (Unrecognized Past Service Cost) and gains/ losses unrecognized actuarial (Unrecognized Actuarial Loss Gain). At the time of applying PSAK No. 24 (2013) this component must be removed from service ratio, so that the figure will be the net liabilities among Present Value Fair Value Assets minus Liabilities Program (if any).

For companies that are still using the 10% corridor method for recognition of actuarial gain/ loss impact is quite significant at the first time.

Regarding other changes or more specific questions, please do not hesitate to contact your consultant at PT Padma Radya Aktuaria for further explanation.