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CA Final · Financial Reporting · Ind AS 19 Employee Benefits

Narmada Steels Ltd's board is evaluating a change in the leave policy. Which of the following changes would require the entity to consider whether the benefit still meets the definition of a short-term employee benefit, as per Ind AS 19?

A change from a non-accumulating to an accumulating benefit requires the entity to reconsider short-term classification. Ind AS 19 treats a change in characteristics, or a non-temporary change in settlement timing expectation, as a trigger, whereas temporary timing changes or mere renaming do not.

  1. AA one-time delay in payment expected for a single quarter due to a temporary bank holiday disruption
  2. BA change in the benefit from a non-accumulating benefit to an accumulating benefitCorrect
  3. CA temporary shift in expected timing of settlement that reverses next period
  4. DA change in the name of the benefit in the HR manual with no change in terms

Explanation

Ind AS 19 says that if the characteristics of the benefit change, such as from non-accumulating to accumulating, or the change in timing expectation is not temporary, the entity considers whether the benefit still meets the short-term definition. Options A and C are temporary timing changes, and D changes only the label.

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