K K Mankeshwar & Co.

Chartered Accountants
CLIENT
___________________________________________
______________

YEAR

ENDED

AS 15 - EMPLOYEE BENEFITS CHECKLIST

Yes

1.
1.1

Applicability:
Are the equity or debt securities of the
enterprise listed on any stock exchange in or
outside India?

1.2

Has the enterprise passed a Board

Resolution to get its equity or debt
securities listed on any stock
exchange in or outside India?

1.3

Is it a commercial, industrial or business

enterprise having a turnover (excluding other
income) in excess of Rs 50 crores for the
immediately preceding reporting period on
the basis of the audited financial statements?
Is it a bank (including co-operative bank),
financial institution or an insurance
company?
Is it a commercial, industrial or business
enterprise having borrowings, including
public deposits, exceeding Rs. 10
crores at any time during the reporting
period?
Is the enterprise, a holding or subsidiary of
any of the above entities?
If the answer to any of the above is in the
affirmative, the Standard would apply in
entirety.
Is an enterprise not covered by 1.1 to 1.6 as
enumerated above and the average
number of persons employed during
the year is 50 or more?
If the answer to 1.8 above is in the
affirmative, the Standard would apply,
in its entirety except for the
following:
Paragraphs 11 to 16 of the Standard to the
extent they deal with the recognition and
measurement principles of short-term
accumulating compensated absences which
are non-vesting.

1.4
1.5

1.6
1.7
1.8

1.9

a.

N
o

Qualify?

Sch
no :

Ref

K K Mankeshwar & Co.

Chartered Accountants
Yes

b.

c.

d.

1.10

1.11

a.

b.

N
o

Qualify?

Sch
no :

Ref

Paragraphs 46 and 139 of the Standard which

deal with the discounting of amounts which
fall due more than 12 months after the
Balance Sheet date.
The recognition and measurement principles
laid down in paragraphs 50 to 116 and the
presentation and disclosure requirements laid
down in paragraphs 117 to 123 of the
Standard in respect of accounting for defined
benefit plans, except as indicated hereunder.
The recognition and measurement principles
laid down in paragraphs 129 to 131 of the
Standard in respect of accounting for other
long-term employee benefits, except as
indicated hereunder:
For the purpose of para 1.9.c and 1.9.d
above, the accrued liability in respect of
defined benefit plans and other long-term
employee benefits should be actuarially
determined and provided for as follows:
The Projected Unit Credit Method is
used for actuarial valuation and
The discount rate used is determined
by reference to market yields at the
Balance Sheet date on Government
bonds.
Is an enterprise not covered by 1.1 to 1.6 as
enumerated above and the average
number of persons employed during
the year is less than 50?
If the answer to 1.10 above is in the
affirmative, the Standard would apply,
in its entirety except for the
following:
Paragraphs 11 to 16 of the Standard to the
extent they deal with the recognition and
measurement principles of short-term
accumulating compensated absences which
are non-vesting.
Paragraphs 46 and 139 of the Standard which
deal with the discounting of amounts that
fall due more than 12 months after the
Balance Sheet date.

K K Mankeshwar & Co.

Chartered Accountants
Yes

c.

d.

1.12

1.13

1.14

1.15

N
o

Qualify?

Sch
no :

Ref

The recognition and measurement principles

laid down in paragraphs 50 to 116 and the
presentation and disclosure requirements laid
down in paragraphs 117 to 123 of the
Standard in respect of accounting for defined
benefit plans, except as indicated hereunder.
The recognition and measurement principles
laid down in paragraphs 129 to 131 of the
Standard in respect of accounting for other
long-term employee benefits, except as
indicated hereunder.
For the purpose of para 1.11c and 1.11d
above, the accrued liability in respect
of defined benefit plans and other
long-term employee benefits should be
calculated and accounted by reference
to some other rational method.
If an enterprise subsequently ceases to be
covered by paras 1.1 to 1.6 earlier, for
two consecutive years, only then the
exemptions available in para 1.9 would
apply.
If an enterprise subsequently qualifies for
exemptions covered by para 1.11
above, for two consecutive years, only
then the exemptions available in para
1.11 would apply.
If an enterprise subsequently ceases to be
qualified for exemptions covered by
paras 1.9 and 1.11 above in the current
accounting period, then the Standard
applies in its entirety except
exemptions covered by 1.9 as the case
may be from the current period.
The corresponding previous period figures
in respect of the relevant disclosures
need not be provided.
Where exemptions have been availed as
covered by paras 1.9 and 1.11 above,
the fact must be disclosed.
In case of exemptions covered by para 1.11,
the method used to calculate and account for
accrued liability must be disclosed.

K K Mankeshwar & Co.

Chartered Accountants
Yes

2
2.1

2.2
2.3

2.4

2.5

N
o

Qualify?

Sch
no :

Ref

Scope
Does the Enterprise provide Employee
Benefits under any of the following:
Formal plans or other formal
agreements between an enterprise and
individual employees, groups of
employees or their representatives.
Legislative requirements, or through
industry
arrangements,
whereby
enterprises are required to contribute
to state, industry or other multiemployer plans.
Informal practices that give rise to an
obligation where the enterprise has no
realistic alternative but to pay
employee benefits.
If the answer to any of the above is yes, the
Standard would apply to the aforesaid items.
This Statement should be applied by
an employer in accounting for all
employee benefits, except employee
share-based payments.
The accounting for such benefits is
dealt with in the Guidance Note on
Accounting for Employee Sharebased Payments issued by the
Institute of Chartered Accountants
of India.
This Statement does not deal with
accounting and reporting by employee
benefit plans.
Employee Benefits include:
Short Term Employee Benefits
Post Employment Benefits
Other Long Term Employee Benefits
Termination Benefits
Employee benefits include benefits provided
to either employees or their spouses,
children or other dependants and may
be settled by payments made either:
(a) directly to the employees, to their spouses,
children or other dependants, or to their
4

K K Mankeshwar & Co.

Chartered Accountants
Yes

2.6

3
3.1

3.2

3.3

N
o

Qualify?

Sch
no :

Ref

legal heirs or nominees; or

(b) to others, such as trusts, insurance
companies.
An employee may provide services to an
enterprise on a full-time, part time,
permanent, casual or temporary basis.
For the purpose of this Statement, employees
include whole-time directors and
other management personnel.
SHORT TERM EMPLOYEE BENEFITS
Based on our understanding of the payroll
business cycle of the enterprise, the
review of employees hand book, H.R.
policies,
Minutes
of
the
Compensation Committee, if any,
review of the prior year working
papers, the legal statutes applicable
etc. ascertain whether any of the
following employee benefits have been
provided?
(a) wages, salaries and social security
contributions;
(b) short-term compensated absences (such as
paid annual leave) where the absences are
expected to occur within twelve months
after the end of the period in which the
employees render the related employee
service;
(c) profit-sharing and bonuses payable
within twelve months after the end of the
period in which the employees render the
related service; and
(d) non-monetary benefits (such as medical
care, housing, cars and free or subsidised
goods or services) for current employees.
If the answer to any of the items covered by
para 3.1 above is in the affirmative,
then such employee benefits need to be
classified as Short Term Employee
Benefits.
Recognition and Measurement:
Ensure that the short term employee benefits
are measured on an undiscounted

K K Mankeshwar & Co.

Chartered Accountants
Yes

3.4
3.4.1

3.4.2

3.4.3

3.4.4

3.5

N
o

Qualify?

Sch
no :

Ref

basis and are recognised:

As
accrued
expenses/prepaid
expenses as the case may be, based on
the amount of benefit vis--vis the
amount already paid; and
As expenses, unless any other
accounting standard permits the
inclusion of benefits in the cost of an
asset.
Short Term Compensated Absences
Ascertain
whether
the
short
term
compensated absences are accumulating, i.e.
whether the absences can be carried forward
and can be used in future periods if the
current periods entitlement is not used in
full?
If the answer to para 3.4.1 above is in
the affirmative, ensure that the
enterprise recognises the expected
cost of employee benefits when the
employees render service that
increases their entitlement to future
compensated absences.
Ensure that the obligation is
recognised, irrespective of the fact
whether the compensated absences are
vesting or non- vesting.
Vesting absences are those when employees
are entitled to a cash payment for unused
entitlement on leaving the enterprise and non
vesting absences are those when employees
are not entitled to a cash payment for unused
entitlement on leaving.
Ensure that the enterprise measures the
obligation at the amount of the additional
payments that are expected to arise solely
from the fact that the benefit accumulates.
In case of non-accumulating compensated
absences, ensure that the enterprise
recognises the expected cost of employee
benefits only when the absences occur, e.g.
Maternity or Paternity Leave.
Profit Sharing and Bonus Plans
6

K K Mankeshwar & Co.

Chartered Accountants
Yes

3.5.1

3.5.2

3.5.3

3.6

4
4.1

N
o

Qualify?

Sch
no :

Ref

Ascertain whether the enterprise has

no realistic alternative but to make
payments on account of profit
sharing and bonus as a result of past
events ; and
Ascertain whether a reliable estimate
of such payments can be made?
a. Is there a formula for determining the
amount of bonus/share of profit,
which has been documented?
b. Has the enterprise determined the
amounts to be paid before the
financial statements are approved?
c. Does the past practice give clear
evidence of the amount of the
enterprises obligation?
Only if the answer to any of the points
above is in the affirmative, the enterprise
can make a reliable estimate of the
payments to be made.
If the answer to para 3.5.1 above is in
affirmative, ensure that the enterprise has
recognised the expected cost of such benefit
as an expense for the period.
Disclosures
This Statement does not require specific
disclosures about short-term employee
benefits. However, where other Accounting
Standards require disclosure whether such
disclosures have been made? For example,
where required by AS 18 Related party
disclosures, whether the enterprise has
disclosed the information about employee
benefits for key management personnel?
(However, disclosure should be made of the
nature of the short term employee benefits
and the accounting policy adopted for the
same)
POST EMPLOYMENT BENEFITS
Based on our understanding of the payroll
business cycle of the enterprise, the review
of employees hand book, H.R. policies,
Minutes of the Compensation Committee,

K K Mankeshwar & Co.

Chartered Accountants
Yes

4.2

4.3.1

4.3.2
4.4.1

4.4.2

5
5.1

5.2

N
o

Qualify?

Sch
no :

Ref

if any, review of the prior year working

papers, the legal statutes applicable etc.
ascertain whether any of the following
employee benefits have been provided?
Retirement Benefits such as gratuity
and pension.
Other Benefits such as post
employment life insurance and post
employment medical care.
If the answer to any of the items covered by
para 4.1 above is in the affirmative, then such
employee benefits need to be classified as
Post Employment Benefits.
Are the principal terms and conditions of
the post employment benefit plans such that
the obligation of the enterprise is restricted
to the amount that it agrees to contribute
to a fund?
If yes, then the post employment benefit plan
must be classified as a defined contribution
plan.
Does the enterprise have an obligation
through:
(a) a plan benefit formula that is not linked
solely to the amount of contributions; or
(b) a direct or indirect guarantee, of a
specified return on contributions; or
(c) informal practices that give rise to an
obligation.
If answer to any of items covered by para
4.4.1. above is in the affirmative, the
enterprises obligation is not restricted to
the amount it agrees to contribute to the
fund.
In such cases, the post employment benefit
plan must be classified as a defined benefit
plan.
MULTI - EMPLOYER PLANS
Whether based on the terms of the plan the
enterprise has classified the multi-employer
plan as defined contribution plan or a defined
benefit plan?
Where a multi-employer plan is a defined

K K Mankeshwar & Co.

Chartered Accountants
Yes

5.3

5.4

7
7.1

N
o

Qualify?

Sch
no :

Ref

benefit plan, ensure that the enterprise has

accounted for its proportionate share of the
defined benefit obligation, plan assets and
cost associated with the plan in the same
way as for any other defined benefit plan and
has disclosed the information as required by
para 23.
When sufficient information is not available
to use defined benefit accounting for a
multiemployer plan that is a defined benefit
plan and consequently accounted as a
defined contribution plan, whether the
enterprise has:
(a) disclosed the fact that the plan is a
defined benefit plan?
(b) disclosed the reason why sufficient
information is not available to enable the
enterprise to account for the plan as a
defined benefit plan?
(c) to the extent that a surplus or deficit in
the plan may affect the amount of future
contributions, disclosed in addition:
i.
any available information about that
surplus or deficit?
ii. the basis used to determine that
surplus or deficit?; and
iii.
the implications, if any, for the
enterprise?
Whether contingent liabilities arising in the
context of multi-employer plans have been
disclosed as per AS 29, 'Provisions,
Contingent Liabilities and Contingent
Assets'?
[e.g., any responsibility under the terms of a
plan to finance any shortfall in the plan if
other enterprises cease to participate].
STATE PLANS
An enterprise should account for a state plan
in the same way as for a multi-employer plan
(Refer para 5 above)
INSURED BENEFITS
Does the enterprise pay insurance premiums
to fund a post-employment benefit plan?

K K Mankeshwar & Co.

Chartered Accountants
Yes

7.2

If yes, then the enterprise should treat such a

plan as a defined contribution plan, unless
the enterprise retains an obligation to either:
a. pay the employee benefits directly
when they fall due; or
b. pay further amounts if the insurer
does not pay all future employee
benefits relating to employee service
in the current and prior periods.
If the enterprise retains such obligation,
the enterprise should treat the plan as a
defined benefit plan.

8
8.1

DEFINED CONTRIBUTION PLANS

Recognition and Measurement:
When an employee has rendered service to an
enterprise during a period, ensure that the
contribution payable to a defined contribution
plan in exchange for that service is measured
on an undiscounted basis and is recognised
as:
An
accrued
expense/prepaid
expense as the case may be, based on
the amount of contribution payable
vis--vis the amount already paid; and
An expense, unless any other
accounting standard permits the
inclusion of benefits in the cost of an
asset.
Note : Where contributions to a defined
contribution plan do not fall due wholly
within twelve months after the end of the
period in which the employees render the
related service, they should be discounted
using the discount rate specified in para 14
below.
Disclosures
i.
Whether the enterprise has disclosed
the amount recognised as an expense
for defined contribution plans?
ii. Whether the enterprise has disclosed
information about contributions to
defined contribution plans for key
management personnel as required

8.2

N
o

Qualify?

Sch
no :

Ref

10

K K Mankeshwar & Co.

Chartered Accountants
Yes

9
9.1

9.2

9.3

9.3.1

9.3.2

N
o

Qualify?

Sch
no :

Ref

by
AS
18,
'Related
Party
Disclosures?
DEFINED BENEFIT PLANS
Accounting for defined benefit plans is based
on actuarial assumptions made to measure
the obligation and the expense and there is a
possibility of actuarial gains and losses.
The obligations are measured on a
discounted basis.
Ensure that the enterprise has not only
accounted for its legal obligation under the
formal terms of a defined benefit plan, but
also for any other obligation that arises
from the enterprises informal practices.
Informal practices give rise to an obligation
where the enterprise has no realistic
alternative but to pay employee benefits.
Balance Sheet
Ensure that the amount recognised as a
defined benefit liability is the net total of the
following amounts:
(a) the present value of the defined benefit
obligation at the Balance Sheet date;
(b) minus any past service cost not yet
recognised;
(c) minus the fair value at the Balance Sheet
date of plan assets (if any) out of which the
obligations are to be settled directly.
Obtain the copies of the Actuarial Valuation
Report provided by an qualified actuary and:
Verify the data which has been
considered by the Actuary with the
underlying records of the enterprise.
Obtain a reconciliation of number of
employees at the beginning of the
year and the end of the year.
Cross tally the number of employees
as per the valuation report with the
payroll register.
Ensure that the present value of the
defined benefit obligation has been
determined regularly at intervals not
exceeding three years.

11

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

9.3.3

9.4

10

Ensure that the most recent

valuation has been reviewed as at the
Balance Sheet date and updated for
any material changes likely to affect
the valuations.
Ensure that the fair value of plan
assets is determined at each Balance
Sheet date.
In case the amount determined under para 9.3
above is negative, ensure that the enterprise
has measured the resulting asset at the lower
of:
(a) the amount determined under paragraph
9.3; and
(b) the present value of any economic
benefits available in the form of refunds from
the plan or reductions in future contributions
to the plan.
The present value of these economic benefits
should be determined using the discount rate
specified in para 14 below.
Profit and Loss Account
Ensure that the enterprise has recognised the
net total of the following amounts in the
Profit and Loss Account, except to the extent
that another Accounting Standard requires or
permits their inclusion in the cost of an asset:
a. current service cost;
b. interest cost;
c. the expected return on any plan assets
and on any reimbursement;
d. actuarial gains and losses;
e. past service cost to the extent that
para 17 below requires an enterprise
to recognise it;
f. the effect of any curtailments or
settlements; and
g. the effect of the limit in para 9.3.3
(b) , i.e., the extent to which the
amount determined under para 9.3 (if
negative) exceeds the amount
determined under para 9.3.3 (b).
PRESENT
VALUE
OF
DEFINED

12

K K Mankeshwar & Co.

Chartered Accountants
Yes

10.1

11

12

12.1

12.2

N
o

Qualify?

Sch
no :

Ref

BENEFIT
OBLIGATIONS
AND
CURRENT SERVICE COST
Recognition and Measurement:
In order to measure the present value of the
post-employment benefit obligations and the
related current service cost, ensure that the
enterprise has :
a. applied an actuarial valuation
method;
b. attributed benefit to periods of service
and
c. made actuarial assumptions.
Actuarial Valuation Method:
Obtain a copy of the Actuarial Valuation
report provided by a qualified actuary and
ensure that Projected Unit Credit Method
has been used to determine the present value
of defined benefit obligations, the current
service cost and past service cost as
applicable.
Attributing benefit to periods of service:
Verify the plans benefit formula and ensure
that the enterprise has attributed the benefit
to periods of service, while determining the
present value of its defined benefit
obligations, the current service cost and past
service cost, as applicable.
Based on the terms of the plan, ascertain
whether the employees service in the later
years will lead to a materially higher level of
benefits than in the earlier years.
If yes, then the ensure that the enterprise
attributes the benefit on a straight-line basis
from:
(a) the date when service by the employee
first leads to benefits under the plan (whether
or not the benefits are conditional on further
service); until
(b) the date when further service by the
employee will lead to no material amount of
further benefits under the plan, other than
from further salary increases.

13

K K Mankeshwar & Co.

Chartered Accountants
Yes

13

13.1

13.2

13.3

14

N
o

Qualify?

Sch
no :

Ref

Actuarial Assumptions
While making actuarial assumptions, ensure
that the actuary has considered both
demographic assumptions and financial
assumptions.
Demographic assumptions which deal with
matters such as:
i.
mortality, both during and after
employment;
ii. rates of employee turnover, disability
and early retirement;
iii.
the proportion of plan members with
dependants who will be eligible for
benefits; and
iv. claim rates under medical plans; and
Financial assumptions which deal with
items such as:
i.
the discount rate;
ii. future salary and benefit levels;
iii.
in the case of medical benefits, future
medical costs, including, where
material, the cost of administering
claims and benefit payments; and
iv. the expected rate of return on plan
assets.
Ensure that actuarial assumptions are
neither imprudent nor excessively
conservative. i.e they are unbiased;
and
reflect the economic relationships
between factors such as inflation,
rates of salary increase, the return on
plan assets and discount rates. i.e.
they are mutually compatible.
Ensure that the financial assumptions are
based on market expectations, at the Balance
Sheet date, for the period over which the
obligations are to be settled.
Actuarial Assumptions: Discount Rate
Ensure that the discount rate used by
the actuary has been determined by
reference to market yields at the
Balance Sheet date on Government

14

K K Mankeshwar & Co.

Chartered Accountants
Yes

14.1

15
15.1

15.2

15.3

15.4

15.5

N
o

Qualify?

Sch
no :

Ref

bonds.
Ensure that the currency and term of
the Government bonds is consistent
with the currency and estimated term
of the post-employment benefit
obligations.
Interest Cost
Ensure that the interest cost is computed by
multiplying the discount rate as determined at
the start of the period by the present value of
the defined benefit obligation throughout that
period, taking account of any material
changes in the obligation.
Actuarial Assumptions: Salaries, Benefits
and Medical Costs.
Ensure that the measurement of post
employment benefit obligations reflects
estimated future salary increases.
Estimates of future salary increases should
take account of inflation, seniority, promotion
and other relevant factors, such as supply
and demand in the employment market.
If the formal terms of a plan (or an
obligation that goes beyond those terms)
require an enterprise to change benefits in
future periods, ensure that the measurement
of the obligation reflects those changes.
In cases where the post-employment benefits
are linked to variables such as the level of
state retirement benefits or state medical
care, ensure that the measurement of such
benefits reflects expected changes in such
variables, based on past history and other
reliable evidence.
While making assumptions about medical
costs, ensure that the enterprise has
considered the estimated future changes in
the cost of medical services, resulting from
both inflation and specific changes in
medical costs.
Ensure that the enterprise has estimated
future medical costs on the basis of its own
historical data.

15

K K Mankeshwar & Co.

Chartered Accountants
Yes

16

17

18

18.1

N
o

Qualify?

Sch
no :

Ref

Where considered necessary, the enterprise

may also use historical data of other
enterprises, insurance companies, medical
providers or other sources.
While estimating of future medical costs, the
enterprise must consider the effect of
technological advances, changes in health
care utilisation or delivery patterns and
changes in the health status of plan
participants.
Actuarial Gains and Losses
Ensure that the actuarial gains and losses
arising on account of increases or decreases
in either the present value of a defined benefit
obligation or the fair value of any related plan
assets are recognised immediately in the
Profit and Loss Account as income or
expense.
Past Service Cost
Has the enterprise introduced a defined
benefit plan or changed the benefits payable
under an existing defined benefit plan?
If yes, ensure that the past service cost arising
out of such changes has been recognised as
an expense on a straight line basis over the
average period until the benefits become
vested.
If the benefits vest immediately, the past
service cost should be recognised
immediately.
Fair Value of Plan Assets
When the market price for plan
assets is not available, ensure that the
fair value of plan assets is estimated
by discounting the expected future
cash flows.
Ensure that the discount rate used,
reflects both the risk associated with
the plan assets and the maturity or
expected disposal date of those assets.
Ensure that the plan assets exclude:
Unpaid contributions due from the
reporting enterprise to the fund; and
16

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

18.2

18.3

19

20

Any
non-transferable
financial
instruments issued by the enterprise
and held by the fund.
Ensure that the plan assets are reduced by any
liabilities of the fund that do not relate to
employee benefits, e.g. trade payable,
liabilities resulting from derivative financial
instruments etc.
Where plan assets include qualifying
insurance policies that exactly match the
amount and timing of some or all of the
benefits payable under the plan, the fair
value of those insurance policies is deemed to
be the present value of the related
obligations.
Reimbursements
Ascertain whether there is a virtual certainty
that another party will reimburse some or all
of the expenditure required to settle a defined
benefit obligation
If yes:
Ensure that the enterprise has
recognised its right to reimbursement
as a separate asset and the same has
been measured at Fair Value.
Ensure that the asset is treated in the
same way as a plan asset.
In the Profit and Loss Account, ensure
that the expense relating to a defined
benefit plan has been presented net of
the amount recognised for a
reimbursement.
Return on Plan Assets
Ensure that expected return on plan
assets has been recognised as the
component of the expense in the
Profit and Loss Account.
Ensure that enterprise has determined
the expected return on plan assets on
basis of the market expectations, at
the beginning of the period, for
returns over the entire life of the
related obligation.
17

K K Mankeshwar & Co.

Chartered Accountants
Yes

21
21.1

21.2

21.4

21.5

N
o

Qualify?

Sch
no :

Ref

Ensure that the difference between the

expected return on plan assets and the
actual return on plan assets is
recognised as an actuarial gain or loss.
While determining the expected and
actual return on plan assets, ensure
that the enterprise has deducted the
expected administration costs, other
than those included in the actuarial
assumptions used to measure the
obligation.

Curtailments and Settlements

Is the enterprise required to:
a. make a material reduction in the
number of employees covered by a
plan, due to the requirement of a
statute/regulator or otherwise; or
b. amend the terms of a defined benefit
plan such that a material element of
future service by current employees
will no longer qualify for benefits,
or will qualify only for reduced
benefits.
If yes, then there is curtailment of employee
benefits.
Has the enterprise entered into a transaction
that eliminates all further obligations for
part or all of the benefits provided under a
defined benefit plan.
If yes, then there is a settlement of employee
benefits.
Ensure that the enterprise has recognised the
gains or losses on the curtailment or
settlement when the curtailment or
settlement occurs.
Ensure that the gain or loss on a curtailment
or settlement comprise:
(a) any resulting change in the present value
of the defined benefit obligation;
(b) any resulting change in the fair value of
the plan assets;
(c) any related past service cost that had not
previously been recognised.

18

K K Mankeshwar & Co.

Chartered Accountants
Yes

21.6

22

23

N
o

Qualify?

Sch
no :

Ref

Before determining the effect of a curtailment

or settlement, ensure that the enterprise has
remeasured the obligation (and the related
plan assets, if any) using current actuarial
assumptions.
Presentation - Offset
Does the enterprise:
(a) have a legally enforceable right to use a
surplus in one plan to settle obligations under
the other plan?
(b) intend either to settle the obligations on a
net basis, or to realise the surplus in one plan
and settle its obligation under the other plan
simultaneously?
If yes, the enterprise can offset an asset
relating to one plan against a liability relating
to another plan.

Disclosures
Whether the enterprise has disclosed the
following information about defined benefit
plans:
(i) information that enables users of
financial statements to evaluate:
(a) the nature of the plans?
(b) the financial effects of changes in those
plans during the period?
(ii) the enterprise's accounting policy for
recognising actuarial gains and losses?
(iii) a general description of the type of
plans?
Note: Item (iii) distinguishes, for example,
flat salary pension plans from final salary
pension plans and from post-employment
medical plans. The description of the plan
should include informal practices that give
rise to other obligations included in the
measurement of the defined benefit obligation
in accordance with para 53 of AS 15 (revised
2005).
(iv) a reconciliation of opening and closing
balances of the present value of the defined
benefit obligations showing separately, if
applicable, the effects during the period
attributable to each of the following:
19

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

(a)
(b)
(c)
(d)
(e)

current service cost?

interest cost?
contributions by plan participants?
actuarial gains and losses?
foreign currency exchange rate on
plans measured in a currency from the
enterprise's reporting currency?
(f) benefits paid?
(g) past service cost?
(h) amalgamations?
(i) curtailments?
(j) settlements?
(v) an analysis of the defined benefit
obligation into amounts arising from plans
that are unfunded and amounts arising from
plans that are wholly or partly funded?
(vi) a reconciliation of the opening and
closing balances of the fair value of plan
assets and of the opening and closing
balances of any reimbursement right
recognized as an asset in accordance with
para 103 of AS 15 (revised 2005) showing
separately, if applicable, the effects during
the period attributable to each of the
following:
(a) expected return on plan assets?
(b) actuarial gains and losses?
(c) foreign currency exchange rate
changes on plans measured in a currency
different from the enterprise's reporting
currency?
(d) contributions by the employer?
(e) Contributions by the plan participants?
(f) benefits paid?
(g) amalgamations?
(h) settlements?
(vii) a reconciliation of the present value of
the defined benefit obligation in (iv) above
and the fair value of the plan assets in (vi)
above to the assets and liabilities recognised
in the Balance Sheet showing at least:
(a) the past service cost not yet recognised
in the Balance Sheet (see para 94 of AS 5
(revised 2005)?
20

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

(b) any amount not recognized as an asset

because of the limit in para 59(b) of AS 15
(revised 2005)?
(c) the fair value at the Balance Sheet date
of any reimbursement right recognised as
an asset in accordance with para 103 of AS
15 (revised 2005) (with a brief description
of the link between the reimbursement
right and the related obligation)?
(d) the other amounts recognised in the
Balance Sheet?
viii) the total expense recognised in the
Profit and Loss Account of each of the
following, and the line item(s) of the Profit
and Loss Account in which they are
included:
(a) current service cost?
(b) interest cost?
(c) expected return on plan assets?
(d) expected return on any reimbursement
right recognised as an asset under
paragraph 103 of AS 15 (revised 2005)?
(e) actuarial gains and losses?
(f) past service cost?
(g) the effect of any curtailment or
settlement?
(h) the effect of the limit in paragraph
59(b) of AS 15 (revised 2005), i.e., the
extent to which the amount determined
under para 55 of AS 15 (revised 2005) (if
negative) exceeds the amount determined
under para 59 (b) of AS 15 (revised 2005)?
(ix) for each major category of plan assets,
which should include, but is not limited to,
equity instruments, debt instruments,
property, and all other assets, the percentage
or amount that each major category
constitutes of the fair value of the total plan
assets?
(x) the amounts included in the fair value of
the plan assets for:
(a) each category of the enterprise's own
financial instruments?
(b) (i) any property occupied by the
enterprise?
21

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

(ii) other assets used by the enterprise?

(xi) a narrative description of the basis used
to determine the overall expected rate of
return on assets, including the effect of the
major categories of plan assets?
(xii) the actual return on:
a) plan assets?
b) any reimbursement right recognised
as an asset in accordance with para
103 of AS 15 (revised 2005)?
(xiii) the principal actuarial assumptions
used as at the Balance Sheet date, including,
where applicable:
(a) the discount rates?
(b) the expected rates of return on any plan
assets for the periods presented in the
financial statements?
(c) the expected rates of return for the
periods presented in the financial
statements on any reimbursement right
recognised as an asset under para 103 of
AS 15 (revised 2005)?
(d) medical cost trend rates?
(e) any other material actuarial
assumptions used?
(f) an assertion under the actuarial
assumptions to the effect that estimates of
future salary increases, considered in
actuarial valuation, take account of
inflation, seniority, promotion and other
relevant factors such as supply and
demand in the employment market?
(xiv) keeping all other assumptions constant,
the effect of an increase of one percentage
point and the effect of a decrease of one
percentage point in the assumed medical
cost trend rates on:
(a) the aggregate of the current service
cost and interest cost components of net
periodic post-employment medical costs?
(b) the accumulated post-employment
benefit obligation for medical costs?
Note: For item (xiv) above, for plans
operating in a high inflation environment, the
disclosure should be the effect of a
percentage increase or decrease in the
22

K K Mankeshwar & Co.

Chartered Accountants
Yes

N
o

Qualify?

Sch
no :

Ref

assumed medical cost trend rate of a

significance similar to one percentage point
in a low inflation environment.
(xv) the amounts for the current annual
period of:
(a) (i) the present value of the defined benefit
obligation?
(ii) fair value of plan assets?
(iii) the surplus or deficit in a plan?
(b) the experience adjustments arising on:
(i) the plan liabilities expressed either as an
amount or as a percentage of the plan
liabilities at the Balance Sheet date? and
(ii) the plan assets expressed either as an
amount or as a percentage of the plan assets
at the Balance Sheet date?
(c) the employer's best estimate, as soon as it
can
reasonably
be
determined,
of
contributions expected to be paid to the plan
during the annual period beginning after the
Balance Sheet date?
Whether the enterprise has disclosed each
actuarial assumption in absolute terms (for
example, as an absolute percentage) and not
just as a margin between different
percentage or other variables?
Where an enterprise has more than one
defined benefit plan, whether disclosures
have been made in total :
(i) separately for each plan? or
(ii) in such grouping as are considered to be
most useful?
When an enterprise provides disclosures in
total for a grouping of plans, whether
disclosures are provided in the form of(i) weighted average? or
(ii) of relatively narrow ranges?
Where required by AS 18, 'Related Party
Disclosures', whether the enterprise has
disclosed information about: (i) related party transactions with postemployment benefit plans? and
(ii) post-employment benefits for key
management personnel?
When required by AS 29, 'Provisions,
Contingent Liabilities and Contingent
23

K K Mankeshwar & Co.

Chartered Accountants
Yes

24
24.1

24.2

24.3

N
o

Qualify?

Sch
no :

Ref

Assets', whether the enterprise discloses

information about contingent liabilities
arising from post-employment benefit
obligations?
OTHER LONG TERM EMPLOYEE
BENEFITS
Based on our understanding of the payroll
business cycle of the enterprise, the review
of employees hand book, H.R. policies,
Minutes of the Compensation Committee,
if any, review of the prior year working
papers, the legal statutes applicable etc.,
ascertain whether any of the following
employee benefits have been provided?
(a) long-term compensated absences such as
long-service or sabbatical leave;
(b) jubilee or other long-service benefits;
(c) long-term disability benefits;
(d) profit-sharing and bonuses payable
twelve months or more after the end of the
period in which the employees render the
related service; and
(e) deferred compensation paid twelve
months or more after the end of the period in
which it is earned.
If the answer to any of the items covered by
para 24.1 above is in the affirmative, then
such employee benefits need to be classified
as Long Term Employee Benefits.
Recognition and Measurement
Ensure that the amount recognised as a
liability for other long-term employee
benefits is the net total of the following
amounts:
(a) the present value of the defined benefit
obligation at the Balance Sheet date;
(b) minus the fair value at the Balance Sheet
date of plan assets (if any) out of which the
obligations are to be settled directly.
Measurement of the liability should be on
the same basis as Defined Benefit Plans as
stated in para 9 to 15 above.
Recognition and measurement of any
reimbursement right should be in accordance

24

K K Mankeshwar & Co.

Chartered Accountants
Yes

24.4

24.5

25
25.1

N
o

Qualify?

Sch
no :

Ref

with para 19 above.

Ensure that the net total of the following
amounts is recognised as an expense or
income, except to the extent that another
Accounting Standard requires or permits their
inclusion in the cost of an asset:
(a) current service cost;
(b) interest cost ;
(c) the expected return on any plan assets and
on any reimbursement right recognised as an
asset;
(d) actuarial gains and losses, which should
all be recognised immediately;
(e) past service cost, which should all be
recognised immediately; and
(f) the effect of any curtailments or
settlements.
Disclosures
This Statement does not require specific
disclosures about long term employee
benefits. However, where other accounting
standards require specific disclosures about
other long term employee benefits, whether
such disclosures have been made?
(e.g., AS 5 , 'Net Profit or Loss for the Period,
Prior Period Items and Changes in Accounting
Policies', AS 18, 'Related Party Disclosures').
TERMINATION BENEFITS
Ensure that the enterprise recognises
termination benefits as a liability and
an expense only when:
a. a present obligation arises as
a result of a past event;
b. there is a probability that an
outflow of resources will be
required
to
settle
the
obligation; and
c. the amount of the obligation
can be reliably estimated.
Ensure that the termination benefits
are recognised immediately as an
expense.
If the termination benefits fall due
more than 12 months after the

25

K K Mankeshwar & Co.

Chartered Accountants
Yes

25.2

26
26.1

26.2.1

N
o

Qualify?

Sch
no :

Ref

balance sheet date, ensure that they

have been discounted using the
discount rate specified in para 14
above.
Disclosures
(i) Where there is uncertainty about the
number of employees who will accept an
offer of termination benefit, whether the
enterprise has disclosed information about
the contingent liability unless the possibility
of outflow in settlement is remote? (AS 29,
'Provisions, Contingent Liabilities and
Contingent Assets')
(ii) Where termination benefit is of such
size, nature or incidence that its disclosure is
relevant to explain the performance of the
enterprise for the period, whether
termination benefits have been disclosed
appropriately?
(AS 5, 'Net Profit or Loss for the Period,
Prior Period Items and Changes in
Accounting Policies')?
(iii) Where required by AS 18, 'Related Party
Disclosures', whether the enterprise has
disclosed information about termination
benefits for key management personnel?
TRANSITIONAL PROVISIONS
Employee Benefits other than Defined
Benefit Plans and Termination Benefits:
Ensure that the difference (as adjusted by
any related tax expense) between the
liability, existing on the date of adopting this
Standard and the liability that would have
been recognised at the same date, as per the
pre-revised AS 15, has been adjusted
against opening balance of revenue
reserves and surplus.
Defined Benefit Plans
Ensure that the enterprise has determined the
liability on the date of first adopting this
Standard as under:
(a) the present value of the obligation at the
date of adoption;
(b) minus the fair value, at the date of
adoption, of plan assets (if any) out of
26

K K Mankeshwar & Co.

Chartered Accountants
Yes

26.2.2

26.2.3

26.2.4

N
o

Qualify?

Sch
no :

Ref

which the obligations are to be settled

directly;
(c) minus any past service cost that should
be recognised in later periods.
If the transitional liability is more than the
liability that would have been recognised at
the same date as per the pre-revised AS 15,
the enterprise can make an irrevocable
choice to recognise that increase as part of
its defined benefit liability:
(a) immediately as an adjustment against the
opening balance of revenue reserves
and surplus (as adjusted by any related tax
expense), or
(b) as an expense on a straight-line basis
over up to five years from the date of
adoption.
If an enterprise chooses option (b) above,
ensure that the enterprise has:
(i) applied the limit described in para
9.3.3(b) above in measuring any asset
recognised in the Balance Sheet;
(ii) disclosed at each Balance Sheet date:
(1) the amount of the increase that remains
unrecognised; and
(2) the amount recognised in the current
period;
(iii) limited the recognition of subsequent
actuarial gains only to the extent that the
net cumulative unrecognised actuarial gains
exceed the unrecognised part of the
transitional liability; and
(iv) included the related part of the
unrecognised transitional liability in
determining any subsequent gain or loss on
settlement or curtailment.
If the transitional liability is less than the
liability that would have been recognised at
the same date as per the pre-revised AS 15,
the enterprise should recognise the decrease
immediately as an adjustment against the
opening balance of revenue reserves and
surplus.

27

K K Mankeshwar & Co.

Chartered Accountants
Yes

26.3

N
o

Qualify?

Sch
no :

Ref

Termination Benefits
Where an enterprise incurs expenditure on
termination benefits on or before 31st March,
2009, the enterprise may choose to follow the
accounting policy of deferring such
expenditure over its pay-back period.
Ensure that the expenditure so
deferred has not been carried forward
to accounting periods commencing on
or after 1st April, 2010.
Ensure that the expenditure so
deferred has been written off over :
a. the pay-back period or
b. the period from the date
expenditure on termination
benefits is incurred to 1st
April, 2010, whichever is
shorter.

Conclusion :
The enterprise has complied with the Standard.
or
The enterprise has complied with the Standard except for
Prepared by ______________________

Date _______________________

Reviewed by ______________________

Date _______________________

Approved by ______________________

Date _______________________

28