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IAS 19Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IAS 19L4 · Expert

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Sorbane SA (fictitious entity) makes furniture; it closes its accounts on 31 December and its functional currency is the euro. Case conventions (pedagogical assumptions): amounts in EUR; all short-term benefits are settled within twelve months; for the managers plan, the benefits paid and the employer contribution occur on 31 December and net interest is computed at the start-of-year rate on the opening net liability; linear attribution of the benefit; the events of the workshop plan take effect on 1 July 20X6, the loss on the prior remeasurement and the net interest of the first half-year being already recognised in it; the rates, the flows and the horizon of the ceiling are data from the actuary; the tax effect is ignored.

Cost of a defined benefit plan: reconciliation of the obligation and the assets, profit or loss, other comprehensive income and remeasurement as a balancing item

Year-end employee benefits file: plan classification, short-term benefits, cost of a defined benefit plan, plan event and asset ceiling

9 documents9 sections to document
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Guided mode

Section 1 of 9

Objective

In progress
Section brief
What to document
The engagement, its scope and the working mode chosen.
Why
A workpaper answers one precise question: framing it avoids off-topic work.
How
Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
Expected result
You know which question the workpaper must settle, and for which reporting date.
Your role
Preparer of the IAS 19 workpaper
Level
Expert
Estimated time
≈ 120 min
Progress
0 / 5 steps done (review excluded)

Context

Sorbane SA (fictitious entity), a furniture manufacturer, closes its accounts on 31 December 20X6. You prepare the year-end employee benefits file: one defined contribution plan and three defined benefit pension plans, the short-term benefits, and the entries of the year. The file will be reviewed by the responsible partner. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Cost and reconciliation of the managers plan

Purpose of the workpaper

Reconcile the obligation and the plan assets from the opening to the closing balance. Net interest follows IAS 19 (start-of-year rate on the opening net liability, flows at year end by case convention); the remeasurements are the differences between the closing balances supplied and the balances computed. Actuarial assumptions, rate and attribution are case data; their choice remains a supported judgment.

Questions of the file covered by this workpaper

  • How is the net liability of the managers plan defined, and how is the cost split between profit or loss and other comprehensive income?
  • Compute the benefit attributed to the year.
  • Compute the service cost of the year.
  • Compute the opening net liability.
  • Compute the interest on the opening obligation.
  • Compute the interest income on the plan assets.
  • Compute the net interest of the year.
  • Reconcile the obligation and determine the actuarial loss as a balancing item.
  • Compute the return on the assets excluding interest from the actual return.
  • Reconcile the assets and determine, as a balancing item, the gain excluding interest.
  • Compute the cost of the managers plan in profit or loss.
  • Compute the net remeasurement in other comprehensive income.
  • Compute the closing net liability of the managers plan.
  • Record the service cost.
  • Record the net interest.
  • Record the net remeasurement in other comprehensive income.
  • Record the employer contribution to the managers fund.
  • Are the actuarial assumptions supported, and is linear attribution retained?

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