IFRIC statement clarifying IFRIC 14

  • IFRIC (International Financial Reporting Interpretations Committee) (blue) Image

23 Aug 2007

On 5 July 2007 the International Financial Reporting Interpretations Committee (IFRIC) issued IFRIC 14 IAS 19–The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

Since the release of the Interpretation the IFRIC has observed several press articles and statements by market commentators providing an inaccurate assessment of the effect of IFRIC 14. Consequently, IFRIC has released a Statement Addressing the Key Issues that Have Been Raised (PDF 60k).

Key points made in the IFRIC statement (the statement explains each):

  • The Interpretation does not change the rules on funding
  • The Interpretation clarifies how entities should account for the effect of any statutory or contractual funding requirements. It cannot change those requirements.
  • The Interpretation does not affect an entity's ability to get a refund.
  • An additional liability is recognised only if both of the following conditions exist:
    • If the entity has a statutory or contractual obligation to pay additional amounts to the plan and
    • If the entity's ability to recover those amounts in the future by refund or otherwise is restricted.
  • The Interpretation clarifies when a surplus in a pension plan can be recognised
  • The Interpretation ensures that the accounting for surpluses is consistent and transparent


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