Ind AS 19 reporting made easy with Lux

Ind AS 19 is the Indian Accounting Standard governing employee benefits. Under Ind AS 19, long-term employee benefits require an actuarial valuation.

An Ind AS 19 actuarial valuation is an assessment of a company’s current and future liabilities generated by employee benefits promises. To complete this report an agreed set of financial and demographic assumptions are used. These are based on the actuary’s best estimates, preferably supported by historical data.

An actuarial valuation requires skilled personnel, both in qualification and in specific experience and application, to meet the stringent reporting requirements. Actuaries are best placed to perform this task.

It is important for companies to understand with certainty their Gratuity, Pension, Helath Care and Annual Leave Entitlement liabilities and to determine whether they are under or over accruing for these employee benefit obligations. It is also important to understand the impact these liabilities will have on a company’s cashflow.

Any company or entity that chooses to meet IFRS disclosure requirements will have to comply with IAS 19 as one of the underlying requirements. Meeting IFRS might be mandated by government, or company Head Office, or by desire to commit to global financial reporting standards and to access world markets, or as a matter of best practice. Ind AS 19 is the Indian version of this international standard.

As employee benefit specialists our proven approach means we:

Collect, reconcile and validate employee payroll data,
Engage with your team to set the valuation basis,
Calculate the actuarial cost of liabilities,
Conclude and make recommendations to Senior Management
Present an extensive actuarial report within five to ten working days

Our actuarial report sets out the following:

1. Data: this includes full employee and benefit reconciliation
2. Assumptions: we set out the impact and materiality or significance of each of our assumptions (demographic and financial)
3. Methodology: we detail our approach in reaching these assumptions in accordance with Ind AS 19
4. Results: we set out the figures you should use in the year-end financials in an easy-to-understand format
5. Projections: we roll forward the results and provide a projection of estimated benefits versus expected future cashflows over the remaining lifespan of the benefits scheme for use in your budgeting process.

We will undertake the actuarial valuation on behalf of your company and ensure that the report is delivered in a timely, easy-to-use format.  By commissioning an actuarial valuation it helps a company to understand, with certainty, its employee benefit obligations. Such an exercise also serves to identify intrinsic risks and associated mitigating actions, which, if necessary, can be implemented without undue delay.

Contact Lux to obtain a detailed proposal, tailored to your Company’s specific needs, by submitting your details via the form on this page or contact us at:

Lux Actuaries & Analytics LLP
Yogesh, FIA, FIAI, ACA
Managing Partner Lux India
+91 9748 97 5590
yogesh@luxactuaries.com

A company’s adoption of IFRS, including Ind AS 19 and/or IAS 19, ensures its financial statements are uniform and comparable to its peers. For long-term employee benefit liabilities, a projection of future cashflow is required up to employees’ normal retirement age. The projection should be conducted under multiple economic scenarios, in order to understand associated risks. This modelling of the future is what the actuarial profession specialises in. By commissioning an actuarial valuation it helps a company to understand, with certainty, its employee benefit obligations. Such an exercise also serves to identify intrinsic risks and associated mitigating actions which, if necessary, can be implemented without undue delay.

We offer more than actuarial valuation solutions. As employee benefit specialists we are well equipped to provide our clients with a number of value-added services such as:

• Validation of internal accounting calculations

• Advice on schemes designed to match employee benefits liabilities

• Guidance on how to mitigate the risks associated with employee benefit liabilities