#IAS26 establishes the measurement and disclosure criteria for reporting #retirement benefit schemes. All plans must provide a statement of changes in net assets available for benefits, a summary of major #accounting practices, and a description of the plan and the impact of any modifications made during the period in their reports.

Scope of IAS 26

Where such financial statements are prepared, this Accounting Standard shall be implemented in the #financial statements of retirement benefit plans.
‘Pension schemes, “superannuation schemes”, and ‘retirement benefit schemes’ are all terms that have been used to describe retirement benefit plans. A retirement benefit plan is treated as a reporting entity distinct from the employers of the plan’s members under this Standard. Further, to the extent that they are not replaced by this Standard, all previous Standards apply to financial statements of retirement benefit plans.

This Standard addresses the plan’s accounting and reporting to all members as a group. It does not address reports to individual participants on their retirement benefit entitlements.

IAS 19 Employee Benefits is concerned with determining the cost of retirement benefits in the financial statements of #businesses that have plans in place. As a result, this Standard supplements IAS 19.

Defined contribution plans under IAS 26

A statement of net assets available for benefits and a description of the financing policy must be included in the financial statements of a defined contribution plan.
The amount of a person’s future benefits under a defined contribution plan is decided by the contributions provided by the employer, the participant, or both, as well as the fund’s operational efficiency and investment profits.

The Defined benefit plans under IAS 26

A defined benefit plan’s report should include one of the following:
• a statement that indicates the available net #assets for benefits, the actuarial present value of promised retirement benefits (differentiating between vested and non-vested benefits), and the excess or shortfall that results, or
• a statement of net assets available for benefits, which may include either a remark revealing the actuarial present value of promised retirement benefits (differentiating between vested and non-vested benefits) or a reference made to this information in an accompanying actuarial report.

Actuarial present value (PV) of promised retirement benefits under IAS 26

The present value of expected payments from a retirement benefit plan can be computed and presented using current salary levels or predicted salary levels up to the time of retirement of members.
The actuarial present value (PV) of promised retirement benefits based on current salary is stated in a plan’s financial statements to highlight the commitment for benefits earned up to the date of the financial statements.
The actuarial present value (#PV) of promised retirement benefits based on predicted salary is reported to highlight the extent of the future liability on a going concern basis

Valuation of plan assets under IAS 26

Investments in retirement benefit plans must be carried at fair value. When it comes to #marketable securities, fair value equals market value. When holding plan #investments for which an estimate of fair value is not available, the reason for not using fair value must be disclosed.
In the instance of marketable securities, fair value is often market value since it is regarded as the most meaningful measure of the securities at the report date as well as the investment performance for the period.

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IAS 26 on Retirement Benefit Plans: Accounting & Reporting

IAS 26, also known as International Accounting Standard 26, provides guidelines for the accounting and reporting of retirement benefit plans. Retirement benefit plans are arrangements that an entity provides to its employees or their dependents after their retirement. These plans can take various forms, such as defined benefit plans, defined contribution plans, or other post-employment benefit plans.

IAS 26 establishes the principles for recognizing, measuring, and disclosing information about retirement benefit plans in an entity’s financial statements. The standard applies to both employer-sponsored retirement benefit plans and plans where an external entity, such as an insurer or a government, provides the benefits.

One of the key requirements of IAS 26 is the separation of the reporting of retirement benefit costs from other costs in an entity’s financial statements. This allows users of the financial statements to assess the financial impact of the retirement benefit plans separately from the entity’s other operations.

Another important aspect of IAS 26 is the requirement to disclose information about the funding status of the retirement benefit plans. This includes information about the assets held to fund the plans, the obligations to provide benefits to employees, and any surplus or deficit in the plans.

IAS 26 also provides guidance on how to account for changes in the assumptions used to calculate the retirement benefit obligations. Changes in assumptions, such as changes in interest rates or mortality rates, can have a significant impact on the financial position of the retirement benefit plans, and entities are required to reflect these changes in their financial statements.

Entities are also required to disclose information about the risks and uncertainties associated with their retirement benefit plans. This includes information about the investment risks, longevity risks, and other risks that could affect the financial position of the plans.

Overall, IAS 26 plays a crucial role in ensuring that entities provide transparent and reliable information about their retirement benefit plans in their financial statements. By following the guidelines provided in the standard, entities can enhance the credibility of their financial reporting and provide stakeholders with a clear understanding of the financial implications of their retirement benefit plans.

In conclusion, IAS 26 on Retirement Benefit Plans is an important standard that provides guidelines for the accounting and reporting of retirement benefit plans. By following the requirements of the standard, entities can ensure that they provide accurate and transparent information about their retirement benefit plans in their financial statements. This helps to enhance the credibility of their financial reporting and provides stakeholders with the information they need to make informed decisions.