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IAS 19 — Accounting for contribution based promises

Date recorded:

The Committee received a request to clarify the accounting for contribution-based promises (i.e. how to measure the present value of the defined benefit obligation related to contribution-based promises) in accordance with IAS 19 (2011) Employee Benefits. An underlying concern in the submission was whether the revisions to IAS 19 in 2011, which clarified the treatment of risk-sharing features related to defined benefit obligations, affect the accounting for contribution-based promises.

At this meeting, the staff presented its research and analysis to date on the issue and requested views and guidance from the Committee as to how to proceed with the issue.

The Committee tentatively chose not to address the accounting for contribution-based promises at this point. The Committee tentatively agreed that the accounting for contribution-based promises would not be affected by the 2011 amendments to IAS 19. However, if these contribution-based promises include risk-sharing arrangements, then those components would be affected by the 2011 amendments to IAS 19 which clarified the treatment of risk-sharing arrangements. Based on the analysis described above, the Committee tentatively decided not to add this narrow issue to its agenda.

The staff also asked the Committee whether it wanted to take a fresh look at how to account for contribution-based promises or reactivate the project on Draft Interpretation D9 and consider how it could be revised and completed, possibly with a re-exposure, or to address a more narrow scope issue within IAS 19 and if so, how the Committee would like the staff to proceed.

The staff and several Committee members noted that the Committee had previously dealt with this issue in 2002-2006 via D9 but had subsequently decided to refer the issue to the Board. This issue is currently not on the Board’s agenda.

Given the nature of the issue and the increasing importance and use of contribution-based promises, the Committee tentatively decided to pursue this issue in line with the agenda criteria using D9 as a starting point.

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