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Employee Settlement Template document sample
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Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Approach
Technical requirements:
As per IAS 19 Employee Benefits:
Short-term employee benefits
Paragraph 23 - Disclosure:
Although this Standard does not require specific disclosures about short-term employee benefits,
other Standards may require disclosures. For example, IAS 24 requires disclosures about employee
benefits for key management personnel. IAS 1 Presentation of Financial Statements requires
23 disclosure of employee benefits expense.
Post-employment benefits: defined contribution plans
Paragraph 46-47 - Disclosure:
46 An entity shall disclose the amount recognised as an expense for defined contribution plans.
Where required by IAS 24 an entity discloses information about contributions to defined contribution
47 plans for key management personnel.
Post-employment benefits: defined benefit plans
Paragraph 120-125 - Disclosure:
An entity shall disclose information that enables users of financial statements to evaluate the nature of
120 its defined benefit plans and the financial effects of changes in those plans during the period.
120A An entity shall disclose the following information about defined benefit plans:
(a) the entity’s accounting policy for recognising actuarial gains and losses.
(b) a general description of the type of plan.
a reconciliation of opening and closing balances of the present value of the defined benefit obligation
(c) showing separately, if applicable, the effects during the period attributable to each of the following:
(i) current service cost,
(ii) interest cost,
(iii) contributions by plan participants,
(iv) actuarial gains and losses,
foreign currency exchange rate changes on plans measured in a currency different from the entity’s
(v) presentation currency,
(vi) benefits paid,
(vii) past service cost,
(viii) business combinations,
(ix) curtailments and
(x) settlements.
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Approach 1
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Approach
an analysis of the defined benefit obligation into amounts arising from plans that are wholly unfunded
(d) and amounts arising from plans that are wholly or partly funded.
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 recognised as an asset in accordance with
paragraph 104A showing separately, if applicable, the effects during the period attributable to each of
(e) the following:
(i) expected return on plan assets,
(ii) actuarial gains and losses,
foreign currency exchange rate changes on plans measured in a currency different from the entity’s
(iii) presentation currency,
(iv) contributions by the employer,
(v) contributions by plan participants,
(vi) benefits paid,
(vii) business combinations and
(viii) settlements.
a reconciliation of the present value of the defined benefit obligation in (c) and the fair value of the
plan assets in (e) to the assets and liabilities recognised in the statement of financial position, showing
(f) at least:
the net actuarial gains or losses not recognised in the statement of financial position (see paragraph
(i) 92);
(ii) the past service cost not recognised in the statement of financial position (see paragraph 96);
(iii) any amount not recognised as an asset, because of the limit in paragraph 58(b);
the fair value at the end of the reporting period of any reimbursement right recognised as an asset in
accordance with paragraph 104A (with a brief description of the link between the reimbursement right
(iv) and the related obligation); and
(v) the other amounts recognised in the statement of financial position.
the total expense recognised in profit or loss for each of the following, and the line item(s) in which
(g) they are included:
(i) current service cost;
(ii) interest cost;
(iii) expected return on plan assets;
expected return on any reimbursement right recognised as an asset in accordance with paragraph
(iv) 104A;
(v) actuarial gains and losses;
(vi) past service cost;
(vii) the effect of any curtailment or settlement; and
(viii) the effect of the limit in paragraph 58(b).
(h) the total amount recognised in other comprehensive income for each of the following:
(i) actuarial gains and losses; and
(ii) the effect of the limit in paragraph 58(b).
for entities that recognise actuarial gains and losses in other comprehensive income in accordance
with paragraph 93A, the cumulative amount of actuarial gains and losses recognised in other
(i) comprehensive income.
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Approach 2
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Approach
for each major category of plan assets, which shall include, but is not limited to, equity instruments,
debt instruments, property, and all other assets, the percentage or amount that each major category
(j) constitutes of the fair value of the total plan assets.
(k) the amounts included in the fair value of plan assets for:
(i) each category of the entity’s own financial instruments; and
(ii) any property occupied by, or other assets used by, the entity.
a narrative description of the basis used to determine the overall expected rate of return on assets,
(l) including the effect of the major categories of plan assets.
the actual return on plan assets, as well as the actual return on any reimbursement right recognised
(m) as an asset in accordance with paragraph 104A.
the principal actuarial assumptions used as at the end of the reporting period, including, when
(n) applicable:
(i) the discount rates;
(ii) the expected rates of return on any plan assets for the periods presented in the financial statements;
the expected rates of return for the periods presented in the financial statements on any
(iii) reimbursement right recognised as an asset in accordance with paragraph 104A;
the expected rates of salary increases (and of changes in an index or other variable specified in the
(iv) formal or constructive terms of a plan as the basis for future benefit increases);
(v) medical cost trend rates; and
(vi) any other material actuarial assumptions used.
An entity shall disclose each actuarial assumption in absolute terms (for example, as an absolute
percentage) and not just as a margin between different percentages or other variables.
the effect of an increase of one percentage point and the effect of a decrease of one percentage point
(o) in the assumed medical cost trend rates on:
the aggregate of the current service cost and interest cost components of net periodic post-
(i) employment medical costs; and
(ii) the accumulated post-employment benefit obligation for medical costs.
For the purposes of this disclosure, all other assumptions shall be held constant. For plans operating
in a high inflation environment, the disclosure shall be the effect of a percentage increase or decrease
in the assumed medical cost trend rate of a significance similar to one percentage point in a low
inflation environment.
(p) the amounts for the current annual period and previous four annual periods of:
the present value of the defined benefit obligation, the fair value of the plan assets and the surplus or
(i) deficit in the plan; and
(ii) the experience adjustments arising on:
the plan liabilities expressed either as (1) an amount or (2) a percentage of the plan liabilities at the
(A) end of the reporting period and
the plan assets expressed either as (1) an amount or (2) a percentage of the plan assets at the end of
(B) the reporting period.
the employer’s best estimate, as soon as it can reasonably be determined, of contributions expected
(q) to be paid to the plan during the annual period beginning after the reporting period.
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Approach 3
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Approach
Paragraph 120A(b) requires a general description of the type of plan. Such a description
distinguishes, for example, flat salary pension plans from final salary pension plans and from post-
employment medical plans. The description of the plan shall include informal practices that give rise to
constructive obligations included in the measurement of the defined benefit obligation in accordance
121 with paragraph 52. Further detail is not required.
When an entity has more than one defined benefit plan, disclosures may be made in total, separately
for each plan, or in such groupings as are considered to be the most useful. It may be useful to
122 distinguish groupings by criteria such as the following:
the geographical location of the plans, for example, by distinguishing domestic plans from foreign
(a) plans; or
whether plans are subject to materially different risks, for example, by distinguishing flat salary
(b) pension plans from final salary pension plans and from post-employment medical plans.
When an entity provides disclosures in total for a grouping of plans, such disclosures are provided in
the form of weighted averages or of relatively narrow ranges.
Paragraph 30 requires additional disclosures about multi-employer defined benefit plans that are
123 treated as if they were defined contribution plans.
124 Where required by IAS 24 an entity discloses information about:
(a) related party transactions with post-employment benefit plans; and
(b) post-employment benefits for key management personnel.
Where required by IAS 37 an entity discloses information about contingent liabilities arising from post-
125 employment benefit obligations.
Other long-term employee benefits
Paragraph 131 - Disclosure:
Although this Standard does not require specific disclosures about other long-term employee benefits,
other Standards may require disclosures, for example, where the expense resulting from such
benefits is material and so would require disclosure in accordance with IAS 1. When required by IAS
24, an entity discloses information about other long-term employee benefits for key management
131 personnel.
Termination benefits
Paragraph 141-143 - Disclosure:
Where there is uncertainty about the number of employees who will accept an offer of termination
benefits, a contingent liability exists. As required by IAS 37 an entity discloses information about the
141 contingent liability unless the possibility of an outflow in settlement is remote.
As required by IAS 1, an entity discloses the nature and amount of an expense if it is material.
Termination benefits may result in an expense needing disclosure in order to comply with this
142 requirement.
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Approach 4
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Approach
Where required by IAS 24 an entity discloses information about termination benefits for key
143 management personnel.
Note to user: please be aware that there is currently not a Standard on Employee Benefits in GRAP only an
exposure draft (ED 49), therefore IAS 19 should be used.
Note on template:
Refer to the "Disclosures" sheet for an illustrative example of the minimum disclosure in the notes to the financial
statements to comply with IAS 19.
Refer to the "GL acc - examples" sheet for an example on how the general ledger accounts for defined benefit
plans' transactions and balances would look like in order to assist in the preparation of the journal entries.
Go to:
Disclosures
GL acc - examples
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Approach 5
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Disclosures
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009
Employee Cost
2009 2008
R R
xx EMPLOYEE RELATED COSTS
Employee related costs - Salaries and Wages
Employee related costs - Contributions for UIF, pensions and medical aids
Travel, motor car, accommodation, subsistence and other allowances
Housing benefits and allowances
Overtime payments
Performance- and other bonuses
Long-service awards
Other employee related costs
Total Employee Related Costs - -
There were no advances to employees. Loans to employees are set out in note xx.
Remuneration of the Municipal Manager
Annual Remuneration
Performance- and other bonuses
Travel, motor car, accommodation, subsistence and other allowances
Contributions to UIF, Medical and Pension Funds
Total - -
Remuneration of the Chief Finance Officer
Annual Remuneration
Performance- and other bonuses
Travel, motor car, accommodation, subsistence and other allowances
Contributions to UIF, Medical and Pension Funds
Total - -
Technical Corporate Community
Remuneration of Individual Executive Directors Services Services Services
R R R
2009
Annual Remuneration
Performance- and other bonuses
Travel, motor car, accommodation, subsistence and other allowances
Contributions to UIF, Medical and Pension Funds
Total - - -
Technical Corporate Community
Services Services Services
R R R
2008
Annual Remuneration
Performance- and other bonuses
Travel, motor car, accommodation, subsistence and other allowances
Contributions to UIF, Medical and Pension Funds
Total - - -
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Disclosures 6
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Disclosures
2009 2008
R R
xx REMUNERATION OF COUNCILLORS
Executive Mayor
Deputy Executive Mayor
Speaker
Executive Committee Members
Councillors
Councillors’ pension and medical aid contributions
Councillors' allowances
Total Councillors’ Remuneration - -
In-kind Benefits
The Executive Mayor, Deputy Executive Mayor, Speaker and Executive Committee
Members are full-time. Each is provided with an office and secretarial support at the
cost of the Council.
The Executive Mayor is entitled to stay at the mayoral residence owned by the Council
at no cost. The Executive Mayor has use of the Council owned vehicle for official
duties. The Executive Mayor has x full-time bodyguards.
xx RETIREMENT BENEFIT INFORMATION
Defined contribution plan
It is the policy of the municipality to provide retirement benefits to all its employees [or
specify number of employees covered]. A number of defined contribution provident
funds namely xxx, which are subject to the Pensions Fund Act, exist for this purpose.
The municipality is under no obligation to cover any unfunded benefits.
Total contribution to such schemes
Defined benefit plan
The defined benefit plans are the xxx. These are not treated as defined benefit plans
as defined by IAS19, but are accounted for as defined contribution plans. This is in line
with the exemption in IAS 19 par. 30 which states that where information required for
proper defined benefit plan accounting is not available in respect of multi-employer
and state plans, these should be accounted for as defined contribution plans. The
municipality has been unsuccessful in obtaining the necessary information to support
proper defined benefit plan accounting due to restrictions imposed by the multi-
employer plan. It is therefore deemed impracticable to obtain this information at a
suitable level of detail.
Certain employees of the municipality belong to the xxx Fund, a multi-employer plan /
state plan. The most recent actuarial valuation was done on x. These valuations
indicate that the plan is in a sound financial position. The estimated liabilities of the
fund are Rx million which are adequately funded by assets of Rx million.
An amount of Rxxx (2008 : Rxxx) was contributed by Council in respect of Councillors
and employees retirement funding. These contributions have been expensed and are
included in employee related costs for the year.
XX Retirement benefits
Defined benefit plan
The defined benefit plan consists of the [specify Pension Fund] governed by the Pension Fund Act of 1956. The actuarial valuation
determined that the retirement plan was in a sound financial position, however that it was recommended that the contribution should be
increased by X% for X months. This recommendation is presently being implemented. The plan is [give details of the plan example: a final
salary pension / flat plan or a post employment medical benefit plan.]
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Disclosures 7
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009
Purpose: Employee cost disclosure notes
Prepared by:
Reference: Disclosures
2009 2008
Carrying value R R
Present value of the defined benefit obligation-wholly unfunded
Present value of the defined benefit obligation-partially or wholly funded
Fair value of plan assets
Net actuarial gains or losses not recognised
Past service cost not recognised
Fair value of reimbursement rights
Asset not recognised due to limitations IAS 19.58
- -
2009 2008
Reconciliation for defined benefit obligation R R
Opening defined benefit obligation
Contributions by members employers and participants
Exchange differences
Benefits paid
Acquired in business combinations
Other
Net expense recognised in the statement of fin. performance
- -
2009 2008
Reconciliation of plan assets R R
Opening fair value of plan assets
Expected return on plan assets
Actuarial gains and (losses)
Assets distributed on settlements
Contributions by employer
Assets acquired in a business combination
Exchange differences on foreign plans
Benefits paid
Contributions by plan participants
- -
2009 2008
Net expense recognised in the statement of fin. performance R R
Current service cost
Past service cost
Interest cost
Actuarial (gains) losses
Curtailment or settlement
Expected return on plan assets
Asset limitation
- -
Key assumptions used 2009 2008
Assumptions used on last valuation on [enter date]
Actual return on plan assets % %
Discount rates used % %
Expected rate of return on assets % %
Expected rate of return on reimbursement rights % %
Expected increase in salaries % %
Medical cost trend rates % %
[Enter other assumptions.]
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls Disclosures 8
Employee cost disclosure
Municipality:
Date:
Year end: 30/06/2009 Go back to approach
Provide examples of defined benefit plan general ledger accounts to
Purpose: assist in the processing of journals
Prepared by:
Reference: GL acc - examples
1. PV of Defined Benefit obligation
• Benefits paid • Opening Balance (given)
• Closing balance • Current service cost (I/S)
_______ • Interest cost (I/S)
_______ • Past service cost (I/S)
= Balancing amount - unrecognised actuarial profit /loss
________
________
2. Fair value of Plan assets
Opening balance • Benefits paid
• Contributions (I/S) • Closing Balance
• Expected return (I/s) ________
= Balancing amount, unrecognised ________
actuarial profit/loss
________
________
3. Unrecognised actuarial profit/loss
• Unrecognised actuarial profit /loss • Balance b/o
(obligation) • Unrecognised actuarial profit /loss
•Recognised in P/L or E (Plan assets)
Balance b/d _________ ________
_________ ________
db8c8157-5809-4fdf-9f62-1e4f6340a73e.xls GL acc - examples 9
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