Lesson 2: Wages And Benefits For Workers In The Financial Statements Will Change When Applying Ifrs?

Regarding wages and benefits paid to employees, the application of IFRS can make significant differences in business results and financial situation of enterprises. Dong Tran Anh Quan, Partner at KPMG Viet Nam.In 1 of this topic analyzed the issues to be noted when the enterprise transformed from the Vietnam Accounting Standard (VAS) to apply the International Financial Reporting Standard (IFRS) related to money Short-term wages, bonuses and welfare for employees. The following article analyzes problems in the transition from VAS to IFRS regarding employers' contributions related to benefits for people Labor after retirement, severance allowances and payments based on shares. The contributions of employers related to welfare for workers after retirement in Vietnam, payments Contributions to employers related to welfare after retirement mainly include contributions to the Social Insurance Fund, Bao Bao Incredible health insurance or, in some rare cases, other additional contributions as agreed between employers and employees

. According to accounting standards and Vietnamese accounting regime Male (VAS), contributions to the Social Insurance Fund, the Health Insurance Fund shall be recognized into production and business costs when the contributions are contributed. VAS has no specific provisions for contributions to other retirement funds due to self-retirement or retired benefits that enterprises are committed to providing employees after terminating the contract labor. These benefits are currently uncommon in Vietnam but quite common in the world
According to IFRS, the retirement benefits are divided into 2 categories. The first is a welfare program with the contributions of the employer's contribution to the defined employer (workers who are not committed to the specific benefits that employees will receive after retirement). Contributions to the Social Insurance Fund, the Health Insurance Fund according to the law belongs to this type. The application of IFRS does not make a difference in the enterprise's financial statements for this type of benefit program. The second type is a welfare program with benefits for employees after retiring by employers Dynamic commitment. When applying ifrs to this type, the recognition of the obligations of employers and related expenses for each period shall be carried out according to the financial model using probability and statistics Conforming with cash flow discount. Industry often uses experts to implement such financial models. Since VAS has no regulations for this type, when applying IFRS, the enterprise has a welfare program for employees of this type to evaluate how the accounting policy applies to enterprises with a distance With IFRS requirements and need to hire an expert to implement the above financial model, or the level of resetting the resignation is a mandatory benefit that employers pay to workers, according to the rules In accordance with Article 46, the Labor Code.Vas refer to the provision for severance allowance but does not specify the value of the debt obligations of employers and related expenses. This leads to interpretation and applicable inconsistencies in fact in preparing financial statements
According to IFRS, the severance allowance as stipulated in Article 46 of the Labor Code is considered a benefit After termination of the law under the law that employers are obliged to pay. The value of the debt obligation of the enterprise and the related expenses for each period is determined according to the financial model using probability, statistics, combination with the same cash flow discount for the blessing program Get benefits for employees after retiring are committed by employers as mentioned above. Payments based on current shares in Vietnam have a number of joint stock companies with Phuc Program Benefits for employees based on stocks to encourage workers towards raising value for shareholders. These programs can have a variety of forms and diverse regimes but in common is a payment for employees (wages, bonuses or welfare) as shares of corporate owners and financial instruments Related birth or money with a relationship with the current share price.Vas does not have specific provisions for these transactions. Therefore, in fact, the financial statements of the business have these programs often do not fully reflect the economic effects of the transaction. For example, the hidden expenses of enterprises due to the issuance of shares to employees with lower prices than the market price are often not recognized on the financial statements, as businesses often account for bonus shares issued Workers at the nominal price and only recorded at the time of release.

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