ADDITIONAL DISCLOSURES REQUIRED BY THE STANDARD

6. ADDITIONAL DISCLOSURES REQUIRED BY THE STANDARD

6.1 In case of both defined benefit plans and defined contribution plans, IAS 26 requires that the reports of a retirement benefit plan should also contain this information:

• A statement of changes in net assets available for benefits • A summary of significant accounting policies • A description of the plan and the effect of any changes in the plan during the period

6.2 Reports provided by retirement benefits plans may include, if applicable (1) A statement of net assets available for benefits disclosing a] Assets at the end of the period suitably classified

b] The basis of valuation of assets c] Details of any single investment exceeding either 5% of the net assets available for

benefits or 5% of any class or type of security d] Details of any investment in the employer e] Liabilities other than the actuarial present value of promised retirement benefits

(2) A statement of changes in net assets available for benefits showing a] Employer contributions

b] Employee contributions c] Investment income such as interest and dividends d] Other income e] Benefits paid or payable (analyzed, e.g., as retirement, death, and disability benefits,

and lump-sum payments) f] Administrative expenses g] Other expenses h] Taxes on income i] Profits and losses on disposal of investments and changes in value of investments j] Transfers from and to other plans

(3) A description of the funding policy (4) For defined benefit plans, the actuarial present value of promised retirement benefits

(which may distinguish between vested benefits and nonvested benefits) based on the benefits promised under the terms of the plan, on service rendered to date and using either current salary levels or projected salary levels. This information may be included in an ac- companying actuarial report to be read in conjunction with the related information.

(5) For defined benefit plans, a description of the significant actuarial assumptions made and the method used to calculate the actuarial present value of promised retirement benefits.

6.3 According to the Standard, since the report of a retirement benefit plan contains a description of the plan, either as part of the financial information or in a separate report, it may contain

(1) The names of the employers and the employee groups covered

Chapter 19 / Accounting and Reporting by Retirement Benefit Plans (IAS 26)

191

(2) The number of participants receiving benefits and the number of other participants, classi- fied as appropriate (3) The type of plan—defined contribution or defined benefit (4) A note as to whether participants contribute to the plan (5) A description of the retirement benefits promised to participants (6) A description of any plan termination terms (7) Changes in items 1. through 6. during the period covered by the report

6.4 Furthermore, it is not uncommon to refer to other documents that are readily available to us- ers in which the plan is described, and to include in the report only information on subsequent

changes.

Wiley IFRS: Practical Implementation Guide and Workbook

MULTIPLE-CHOICE QUESTIONS

1. IAS 26 deals with (a) Employers’ accounting for the cost of retire-

ment benefits. (b) General-purpose financial statements of fi- nancial reports of retirement benefit plans. (c) Only defined contribution plans and not de- fined benefit plans. (d) Only defined benefit plans and not defined contribution plans.

Answer: (b)

2. In rare circumstances, when a retirement benefit plan has attributes of both defined contribution and defined benefit plans, according to IAS 26 it is deemed

(a) Defined benefit plan. (b) Defined contribution plan. (c) Neither a defined benefit nor a defined con-

tribution plan. (d) For aspects of the hybrid plan that are simi- lar to a defined benefit plan: provisions of IAS 26 applicable to such plans are to be applied; for aspects of the hybrid plan that are similar to a defined contribution plan, provisions of IAS 26 that apply to such plans are to be applied.

Answer: (a)

3. In the case of a defined benefit plan, IAS 26 (a) Makes it incumbent upon the plan to obtain

an actuarial valuation. (b) Does not make it incumbent upon the plan to obtain an actuarial valuation. (c) Allows the plan to estimate the present value of future benefits based on valuations done by other similar plans.

(d) Allows the plan to add a percentage based on consumer price index to the previous year’s valuation of actuarial valuation.

Answer: (b)