AUSTRALIA - Revising the AASB 119 - the Australian accounting standard covering employee benefits - in line with the amendments made by the IASB to the IAS 19 standard last month, the Australian Accounting Standards Board has introduced options of the "corridor approach" and immediate recognition in retained earnings through a separate statement.
AASB chairman David Boymal said: “The most significant change in the revised AASB 119 has been the introduction of two additional options to account for actuarial gains and losses associated with defined benefit plans – the “corridor” approach which was not permitted in AASB 119 as issued in July 2004 and the “direct to retained earnings” method introduced by the IASB amendments to IAS 19 standard.
“Although the AASB believes that the immediate recognition of actuarial gains and losses associated with defined benefit plans in profit or loss is the most conceptually sound and useful approach, the AASB considers that the IASB’s introduction of an additional option in its amendments to IAS 19 Standard creates uncertainty about the direction that the IASB will take on this issue in IAS 19 in the future.
He added: “Accordingly, AASB 119 has been revised to allow all the options in IAS 19 to be used to account for actuarial gains and losses in relation to defined benefit plans.”
The board also made changes to the treatment of multi-employer plans and disclosure requirements on the lines of the amended IAS 19 accounting standard. Like IAS 19, the changes to AASB 119 are also mandatory for years commencing on or after January 1, 2006 but may also be adopted one year earlier on a voluntary basis.
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