Benefits India - Issue 14

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Welcome to the fourteenth edition of Benefits India.

The festival of lights beckons the dawn of hope and the triumph of good. Hope is indeed the need of the hour, in a testing economic scenario with India confronting conflicting priorities of controlling inflation and growth. The scenario on the employee benefits front is equally dynamic in India with many changes effected in the Provident Fund space domestically, besides the global changes in IFRS.

This edition of our newsletter brings to you thought provoking articles, latest news updates on employee benefits and upcoming events.

The article on Provident Fund gives you a summary of a recent EPFO directive for a compliance audit of exempted establishments, implications for you as an employer and aspects you need to know to be prepared in order to comply with the requirements are covered in this article.

The IFRS changes in employee benefit accounting, which require the recognition of the actuarial gains/ losses in the other comprehensive income as against the profit and loss account in the existing standards, have brought an enhanced focus on assumption setting. There has to be greater scrutiny on the assumptions used for valuations as the use of appropriate assumptions of salary escalation, attrition, leave utilisation etc, will enable the employee benefit accrual cost to be measured more accurately. Auditors would now have a greater focus on assumptions to ensure that the profit and loss account is not managed on account of employee benefit costs as the gains / losses arising out of experience being different from assumptions will not flow through the P&L. This is relevant both under the IFRS standards effective 1 January 2013 (comparative for 2012 required) and the India IFRS convergence standards. The article focuses on our experience based on the advice we have been providing to our clients on the need for review of assumptions, that brings out the use of evidence based approach for assumption setting.

The Towers Watson team also takes this opportunity to wish you and your family a happy and prosperous new year 2012 and look forward to providing you with insights and information through our newsletters in the new year.

If there are any queries or feedback you have from any of these articles please do not hesitate to contact us.

Anuradha Sriram
Director – Benefits, Towers Watson India