Blogging Employee Benefits

March 20, 2006

IFRIC on Effect of Minimum Funding Requirement on Asset Ceiling

Filed under: Accounting, IASB — Fuguerre @ 5:35 pm

In its meeting earlier this month, the International Financial Reporting Interpretations Committee discussed a staff draft Interpretation addressing the effect of a statutory minimum funding requirement on the asset ceiling requirement under IAS 19. [IFRIC Update, p.3] Reaffirming its previous deliberations, the IFRIC confirmed that if an entity has a statutory requirement to make plan contributions in excess of the IAS 19 defined benefit obligation and the assets derived from those contributions would not be available to the entity as a reduction in future contributions or refund of surplus, then the funding requirement generates an additional liability under IAS 19.

  • By analogy, that analysis might apply to other circumstances. However, the IFRIC decided not to generalize the scope and title of the draft Interpretation.
  • In the calculaton of the asset available as a reduction in future contributions, no allowance should be made for future changes in the size and demographics of the entity’s workforce.

Editorial changes were suggested, including recommendation for clearer distinction between funding versus accounting issues. Staff is to prepare a revised draft of the Interpretation for discussion at IFRIC’s next meeting.


February 20, 2006

IASB Proposes Changes to Stock Compensation Accounting

Filed under: Accounting, IASB, Stock Compensation — Fuguerre @ 11:28 am

The International Accounting Standards Board has proposed changes to international accounting rules relating to two common aspects of stock compensation. [Exposure Draft of Proposed Amendments to IFRS 2 Share-based Payment: Vesting Conditions and Cancellations; Press Release, 2/2/06] The two issues were previously considered by the International Financial Reporting Interpretations Committee, which was unable to reach a consensus.

  • Vesting Conditions – The proposed change clarifies that only service conditions and performance conditions constitute vesting conditions.
  • Cancellations – The proposed change clarifies that cancellations by parties other than the accounting entity are to be accounted for in the same way as cancellations by the entity.

The proposed amendments are to apply for annual periods beginning on or after 1/1/2007. Comments on the proposed changes should be submitted to the IASB by 6/2/2006.

Blog at