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IAS 19 — Accounting for contribution based promises: Review of tentative agenda decisions published in May 2012 IFRIC Update

Date recorded:

The Committee previously considered a request to clarify whether the revisions to IAS 19 Employee Benefits in 2011 affect the accounting for contribution-based promises.

During those meetings, the Committee noted the revisions to IAS 19 in 2011 clarified the treatment of risk-sharing features (described in paragraph BC144 as features that share the benefits of a surplus or the cost of deficit between the employer and the plan participants or benefit plans that provide benefits that are conditional to some extent whether there are sufficient assets in the plan to fund them). The scope of the amendments was not intended to address elements specific to contribution-based promises. Accordingly, the Committee did not expect the revisions to IAS 19 to result in a change to the accounting for contribution-based promises unless such promises also include elements of risk-sharing arrangements. The Committee’s believed its conclusions were supported by paragraph BC148 of IAS 19 (revised in 2011), which notes that the measurement of contribution-based promises and similar promises was beyond the scope of the 2011 revisions.

At this meeting, the staff noted that four comment letters had been received in response to the tentative agenda decision, and all four comment letters agreed with the decision not to take this issue onto the Committee’s agenda. However, there were requests for clarification related to the tentative agenda decision; that being, clarification of the term risk-sharing features as included in the tentative agenda decision; and clarification that the changes to IAS 19 in the 2011 should not affect the accounting for contribution-based promises if they do not include risk-sharing arrangements. On the basis of these comments, minor edits were made to the tentative agenda decision wording. Absent some minor editorial changes, the Committee agreed with the revised agenda wording; reflecting a decision not to add this issue to the Committee’s agenda based on the analysis described above.

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