This free, guided checker walks your finance team through the key decision points for IAS 19 Other Long-term Employee Benefits. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Other long-term employee benefits are all employee benefits other than short-term, post-employment, and termination benefits (IAS 19.8). Examples include long-service or sabbatical leave, jubilee benefits, long-term disability, and deferred remuneration not expected to be settled wholly within twelve months (IAS 19.153). Test the expected timing of settlement, not the contractual maturity alone; a bonus expected to pay within twelve months is short-term even if the plan runs for years.
Apply short-term employee benefit accounting: recognise the undiscounted amount as service is rendered (IAS 19.11).
Official guidance: IFRS issued standards
Post-employment benefits are payable after the completion of employment; other long-term benefits are payable during employment but not within twelve months (IAS 19.8). The distinction matters because post-employment defined benefit plans recognise remeasurements in other comprehensive income, whereas other long-term benefits recognise all remeasurements in profit or loss (IAS 19.154). Misclassifying an in-service disability plan as post-employment routes remeasurements to the wrong statement.
Classify the benefit as post-employment and apply defined contribution or defined benefit accounting (IAS 19.8; IAS 19.27).
Official guidance: IFRS issued standards
IAS 19.156 singles out long-term disability benefits: where the level of benefit depends on length of service, the obligation arises as service is rendered and reflects the probability and expected duration of payment; where the benefit is the same regardless of service, the cost is recognised when the disabling event occurs. Identify how the plan design links benefit to service, because it drives when the obligation is recognised.
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Official guidance: IFRS issued standards
IAS 19.154 requires other long-term benefits to be measured by applying the defined benefit measurement paragraphs, which means the projected unit credit method (IAS 19.67-68) attributing benefit to periods of service. Engage a qualified actuary where the obligation is material or the assumptions are complex. A common error is measuring long-service or disability liabilities on an undiscounted accrual basis rather than an actuarial present value.
Obtain an actuarial valuation using the projected unit credit method (IAS 19.67), as required for other long-term benefits (IAS 19.154).
Official guidance: IFRS issued standards
IAS 19.76 requires actuarial assumptions to be unbiased and mutually compatible - financial assumptions based on market expectations at the reporting date, and demographic and financial assumptions consistent with one another (for example inflation feeding both salary growth and the discount rate). Review disability incidence, recovery, mortality, salary growth, and discount rate together. Assumptions carried forward unchanged from a prior period without review are a frequent audit finding.
Update the actuarial assumptions so they are unbiased and mutually compatible (IAS 19.75-76).
Official guidance: IFRS issued standards
For other long-term benefits, IAS 19.155 requires the net total of service cost, net interest on the net liability or asset, and remeasurements to be recognised in profit or loss, except where another IFRS permits capitalisation in an asset. Net interest is the discount rate applied to the net obligation. Unlike post-employment defined benefit plans, none of these components is deferred or presented in other comprehensive income.
Recognise service cost and net interest in profit or loss (IAS 19.155).
Official guidance: IFRS issued standards
The simplified method for other long-term benefits does not recognise remeasurements in other comprehensive income (IAS 19.154); all remeasurements, including actuarial gains and losses and the return on any plan assets, go to profit or loss under IAS 19.155(c). Only post-employment defined benefit plans present remeasurements in OCI (IAS 19.120(c)). Routing other long-term benefit remeasurements through OCI is a common and material error.
Recognise all remeasurements, including actuarial gains and losses, in profit or loss rather than OCI (IAS 19.154; IAS 19.155).
Official guidance: IFRS issued standards
Service cost for other long-term benefits includes past service cost (IAS 19.155(a)), which is recognised at the earlier of the plan amendment or curtailment and the related restructuring or termination costs (IAS 19.103). There is no spreading of past service cost over a vesting period. Identify amendments to disability or long-service benefit formulas during the period and expense the resulting past service cost immediately.
Recognise past service cost in profit or loss at the date of the plan amendment (IAS 19.103; IAS 19.155).
Official guidance: IFRS issued standards
IAS 19.83 sets the discount rate by reference to market yields at the reporting date on high-quality corporate bonds, using government bond yields where there is no deep market in such corporate bonds; the currency and term must be consistent with the obligation. Apply this rate through IAS 19.154 to other long-term benefits. Using an entity borrowing rate or an expected return on plan assets is incorrect.
Discount the obligation at market yields on high-quality corporate bonds matched to currency and term (IAS 19.83).
Official guidance: IFRS issued standards
IAS 19.158 clarifies that the Standard does not require specific disclosures for other long-term employee benefits, but other IFRSs do: IAS 1 requires disclosure of the employee benefits expense, and IAS 24 requires disclosure of benefits for key management personnel. Present the expense within employee benefit costs and distinguish other long-term benefits from short-term and post-employment categories so users can understand the nature of the plans.
Present the other long-term benefit expense within the employee benefit disclosures required by IAS 1.104 and IAS 24 (IAS 19.158).
Official guidance: IFRS issued standards
Maintain a reconciliation of the opening and closing obligation showing current service cost, net interest, remeasurements, benefit payments, and any past service cost, agreed to both the actuarial valuation report and the general ledger. This roll-forward is the primary audit evidence for the liability even though IAS 19 does not prescribe a specific disclosure. Unreconciled movements between the actuary report and the ledger are a common control weakness.
Other long-term employee benefit accounting and disclosures are complete under IAS 19.153-158 (IAS 19.154; IAS 19.158). Reconcile the obligation roll-forward to the actuarial valuation report (IAS 19.154).
Official guidance: IFRS issued standards
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