Comply with International Accounting Standard 19

IAS 19 reporting made simple and easy with Lux

In the Middle East and North Africa regions, companies are working towards meeting global best practice standards as set out in the International Financial Reporting Standards (IFRS). Increasingly, auditors and regulators are insisting that companies implement International Accounting Standard 19 (IAS 19).

IAS 19 requires a re-measurement of long-term employee benefits and their corresponding liabilities. Such benefits include End of Service Gratuity Benefits or lump sum termination benefits, which must be valued, validated and certified by an actuary.

How to comply with IAS 19

What is an IAS 19 actuarial valuation?

An IAS 19 actuarial valuation is an assessment of a company’s current and future liabilities using an agreed set of financial and demographic assumptions that are based on the actuary’s best estimates, preferably supported by historical data.

An IAS 19 actuarial valuation requires skilled personnel, both in qualification and in specific experience and application, to meet the stringent reporting requirements. It makes sense to appoint an experienced actuary to annually perform this task.

 

Lux Actuaries & Consultants is best placed to perform IAS 19

As employee benefit specialists, our proven approach means we:

  • >
    collect, reconcile and validate employee payroll data,
  • >
    engage with your team to set the valuation basis,
  • >
    calculate the actuarial cost of liabilities,
  • >
    conclude and make recommendations,
  • >
    present an extensive actuarial report within five to ten working days.
FAQs

Find out how to comply with IAS 19
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FAQs
What is IAS 19?
What is an IAS 19 actuarial valuation?
Why conduct and IAS 19 valuation?
Does IAS 19 apply to all countries and companies?
How does the process work?
What does the report include?
How can Lux make your work as HR or Finance Director easier?
What are the advantages of conducting an IAS 19 actuarial valuation?
What other employee benefits services does Lux offer?
How do I find out more?
What is IAS 19?

IAS 19 is the International Accounting Standard governing employee benefits. Under IAS 19, long-term employee benefits require an actuarial valuation.

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What is an IAS 19 actuarial valuation?

An IAS 19 actuarial valuation is an assessment of a company’s current and future liabilities generated by employee benefits promises. To complete this valuation, an agreed set of financial and demographic assumptions are used. These are based on the actuary’s best estimates, preferably supported by historical data.

An IAS19 actuarial valuation requires skilled personnel, both in qualification and in specific experience and application, to meet the stringent reporting requirements. It is necessary to employ professional actuaries to perform this task.

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Why conduct and IAS 19 valuation?

It is important for companies to understand with certainty their end of service gratuity liabilities and to determine whether they are under or over accruing for these employee benefit obligations. It is also important to understand the impact these liabilities will have on a company’s future cashflow.

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Does IAS 19 apply to all countries and companies?

Any company or entity that chooses to meet IFRS disclosure requirements will have to comply with IAS 19 as one of the underlying requirements. Meeting IFRS might be mandated by government, or company Head Office, or by desire to commit to global financial reporting standards and to access world markets, or as a matter of best practice.

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How does the process work?

As employee benefit specialists, our proven approach means we:

Collect, reconcile and validate employee payroll data,
Engage with your team to set the valuation basis,
Calculate the actuarial cost of liabilities,
Conclude and make recommendations to Senior Management,
Present an extensive actuarial report within five to ten working days

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What does the report include?

Our actuarial report sets out the following:

  1. Data: this includes full employee and benefit reconciliation
  2. Assumptions: we set out the impact and materiality or significance of each of our assumptions (demographic and financial)
  3. Methodology: we detail our approach in reaching the results, in accordance with IAS 19
  4. Results: we set out the figures you should use in the year-end financials, in an easy-to-understand format
  5. Projections: we roll forward the results and provide a projection of estimated benefits versus expected future cashflows over the remaining lifespan of the benefits scheme, for use in your budgeting process.
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How can Lux make your work as HR or Finance Director easier?

We will undertake the actuarial valuation on behalf of your Company and ensure that the report is delivered in a timely, easy-to-use format.

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What are the advantages of conducting an IAS 19 actuarial valuation?

A company’s adoption of IFRS, including IAS 19, ensures its financial statements are uniform and comparable to its peers. For long-term employee benefit liabilities, a projection of future cashflow is required up to employees’ estimated time of leaving/retirement/death. The projection should be conducted under multiple economic scenarios, in order to understand associated risks. This modelling of the future is what the actuarial profession specialises in.

By commissioning an IAS 19 actuarial valuation it helps your Company to understand, with certainty, your employee benefit obligations. Such an exercise also serves to identify intrinsic risks and associated mitigating actions which, if necessary, can be implemented without undue delay.

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What other employee benefits services does Lux offer?

We offer more than actuarial valuation solutions. As employee benefit specialists we are well equipped to provide our clients with a number of value-added services, such as:

  • Validation of internal accounting calculations and reporting
  • Advice on scheme design, to match employee benefits liabilities, and/or reward employees via contributory savings
  • Guidance on scheme governance and how to mitigate the risks associated with employee benefit liabilities, including funding solutions
  • Cost/Benefit analysis of introducing an employee benefits scheme, based on different scenarios
  • Advice on asset/liability matching and risk-reducing strategies
  • Employee payroll data audits, to verify accuracy and completeness
  • Employee communications, including scheme booklets and total reward statements
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How do I find out more?

Contact Lux to obtain a detailed proposal, tailored to your Company’s specific needs, by submitting your details via the form on this page or contact us at:

Lux Actuaries & Consultants
Susan Turner, BSC, FPMI
Head of Employee Benefits Services
+971 52 851 4075
susanturner@luxactuaries.com

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What to consider following an IAS 19 actuarial valuation

Once a Company’s Employee Benefit liabilities have been valued, consideration should then be given to funding for at least a proportion of these obligations.  Funding has the following advantages; 
1) It removes the EoSG liability off a Company’s Balance Sheet, or possibly matches it.
2) It reduces the cash-flow risk of not being able to meet termination payment obligations to ex-employees from available Working Capital and 
3) It introduces cost certainty, thereby achieving stability to the Income Statement.

Further benefits are improved credit rating status with the various assessors, including the Company’s bank, and reduced cost, as a result of gaining investment returns on the matching assets.

If you're interested in finding out basic information about the funding solution Lux offers (the PRISM product), then please visit our website: prism.luxactuaries.com and glance through the online Brochure.

 

What if your last IAS 19 actuarial valuation was not conducted by Lux

We will offer you a free, totally confidential, peer review of your IAS 19 report.

We will review the report within 3 work-days, following signing of our Confidentiality Agreement stating that Lux will not ever disclose any of your personal and sensitive data. We have an obligation to you only, for the peer review. 

We will email you a half-page assessment of the IAS 19 report and its results.

Our half-page diagnostic report will comment on 3 aspects;
1) Are the assumptions and methodology in line with industry best practice
2) If not, and should your auditors notice and eventually force you to change, will cost and liability decrease or increase, and;
3) Does the report meet professional standards (substandard reports are open to easy auditor criticism).

Our health-check report will either give you an all-clear or allow you to prepare for future auditor pressure on your IAS 19 figures. This allows you to safe-guard your company's financial position on IAS 19 and avoids any unwanted surprises, due to sudden increases in liability and cost.

If, after the assessment, you should require more in-depth investigation, or re-calculation of results, then we would be delighted to perform such work at competitive rates. This would allow you to manage any differences to industry standards, over time and at your own pace.

Contact Lux to obtain a detailed proposal, tailored to your Company’s specific needs.

Thank you for providing us with your details.

Susan Turner, our Head of Employee Benefits Service, will be in touch shortly.

Should you have any questions in the meantime please contact us on
susanturner@luxactuaries.com

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Contact Lux
Susan Turner
BSC, FPMI
Head of Employee Benefits Services
+971 52 851 4075
susanturner+ias19@luxactuaries.com

Lux is...

  • The largest independent actuarial consultancy in the Middle East
  • Highly experienced, we have delivered actuarial valuation reports to many prominent companies in the GCC region and globally
  • Fully abreast of all key regulatory and IAS 19 requirements
  • Committed to international codes of conduct that govern our profession
  • Focused on building long-term and valued relationships with our clients, helping them to manage their employee costs and retention
  • Committed to exceeding deadline expectations