IAS 19 Standard

IAS 19 is an international standard that deals with the measurement of employee benefits.
This standard is one of the IFRS standards that led to a change in the measurement of liabilities and assets in terms of fair value. The Israeli market has made the transition to fair value measurement and fully implemented IAS 19 during the years 2006-2007.

The essence of the actuary's work in the process of valuation of employee benefits

• The essence of the standard is the presentation of the value of the benefits in terms of present value, also known as the "fair value" method, which is calculated on an actuarial basis and takes into account, among other things, future wage increases, entitlement to receive compensation, and the employee turnover rate.

• Measurement is based on a fair value basis, which involves estimating expected future cash flows and discounting them (with yields that are based on high-rated corporate bonds).

• Calculation of liabilities is made on an actuarial basis and takes into account the time value of the payment date and the value of the payment in the future.

• Future payments are based on a probability of withdrawal under conditions of eligibility for reasons such as resignation or dismissal/death, disability/retirement.

• In order to estimate the fair value of the liability, the future increases in the amount of the benefit must be taken into account and the flow of payments must be capitalized as of the balance sheet date.

• In the case of a commitment to severance pay (funded benefit) to the employer, the assignments, which have been accumulated in insurance policies, pension funds, and/or provident funds are used as assets and constitute a plan asset according to the definition of the standard.

There is a wide variety of benefits that require an actuarial valuation for the purpose of determining a fair value estimate, among them:

• Severance payment, unless employees are under DC (defined contribution) plan - "seif 14"

• Seniority grants/retirement grants

• Redemption of sick days

• Vacation (if the accruals exceed twice the annual quota)

• Payments to pensioners (holiday pay, newspaper, other benefits) budget pension

• compensated absences (paid vacation and sick leave)

• Retirement benefits, including pensions and lump sum payments

• Post-employment medical and life insurance benefits

• long-service or sabbatical leave

• 'Jubilee' benefits

• Deferred compensation programs

• Termination benefits.

Since the implementation of the standard, We have accompanied many companies in the stages of issuing shares, raising debt, and switching to the IFRS reporting method according to international standards.
We would be glad to accompany your organization from the initial stage of mapping the benefits, and data collection to the assistance of implementing our final actuarial report in your financial statements including the preparation of required financial statement disclosures.
We have extensive experience working with the Israeli and international audit firms.