EFRAG's endorsement advice letter to the EC on the amended version of IAS 19 Employee Benefits

21 October 2011

EFRAG completed its due process regarding IAS 19 Employee Benefits (as amended in June 2011) and has submitted its Endorsement Advice Letter and Effects Study Report to the European Commission.

In June 2011, the IASB issued an amended version of IAS 19 'Employee Benefits'. The IASB’s Amendments focus on the immediate recognition of all changes in the net liability or asset (elimination of the ‘corridor approach’ and elimination of options in the presentation of actuarial gains and losses), the disaggregation and presentation of defined benefit cost components, redefining the components of defined benefit cost, the treatment of plan amendments, curtailments and settlements, termination benefits and improvements in disclosures.

EFRAG has issued its Endorsement Advice Letter and Effects Study Report relating to the endorsement of the Amendments for use in the European Union and European Economic Area. EFRAG supports the Amendments and has concluded that they meet the requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards in that they:

• are not contrary to the "true and fair view" set out in Article 16(3) of Council Directive 83/349/EEC and Article 2(3) of Council Directive 78/660/EEC; and
• meet the criteria of understandability, relevance, reliability and comparability required of the financial information needed for making economic decisions and assessing the stewardship of management.

EFRAG believes that it is in the European interest to adopt the Amendments and, accordingly, EFRAG recommends their adoption.

Full paper

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