I think that gratuity calculation is required only when the employee is going to leave the organisation.
From India, Ranchi
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1From India, Ranchi
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Surprised to see comments from various people - concept of gratuity valuation is widely misunderstood it seems. Actuarial valuations of gratuity, leave encashment, pension or other defined benefit schemes are mandatory as per AS 15 (revised, 2005) for following companies:
1. Listed companies
2. Banks/FIs/Insurance companies
3. Companies having turnover more than 50 crores
4. Companies having borrowings more than 10 crores
5. Companies employing more than 50 employees
Even companies which do not fall under any category above need to consult a certified actuary to assess materiality and need of any actuarial valuation.
Such valuations cannot be done by company officials or their auditors - this would account to violation of the accounting standard
From India, Bangalore
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1. Listed companies
2. Banks/FIs/Insurance companies
3. Companies having turnover more than 50 crores
4. Companies having borrowings more than 10 crores
5. Companies employing more than 50 employees
Even companies which do not fall under any category above need to consult a certified actuary to assess materiality and need of any actuarial valuation.
Such valuations cannot be done by company officials or their auditors - this would account to violation of the accounting standard
From India, Bangalore
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Thanks numerica.in;850235 for your update.
'AS 15' appears to be an Accounting Standard and most of HR Professionals like me are not aware of Accounting Standards. I believe all Chartered Accountants and Auditors must be well aware of provisions of 'AS 15' and compliance needed under it. Hopefully they are ensuring necessary compliance in companies they are associated with.
Anyway thanks for update.
Thanks & Regards
From India, Pune
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'AS 15' appears to be an Accounting Standard and most of HR Professionals like me are not aware of Accounting Standards. I believe all Chartered Accountants and Auditors must be well aware of provisions of 'AS 15' and compliance needed under it. Hopefully they are ensuring necessary compliance in companies they are associated with.
Anyway thanks for update.
Thanks & Regards
From India, Pune
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Dear All,
I have encountered an issue regarding gratuity valuation:
As of 31st March 2010, based on actuarial valuation, the provision we have created in our balance sheet is Rs. 198,416. Additionally, we have a Group Gratuity scheme with LIC, where the already deposited amount as of 31st March 2010 is Rs. 998,416.
Now, for the period up to 31st August 2010, LIC is requesting an additional deposit of Rs. 10 above what has already been deposited. They refer to this as the Current Service Cost + Additional contribution for the existing fund for the period from 1st August 2009 to 31st August 2010.
My question is, how much should we deposit with LIC to ensure compliance with all regulations and laws?
Furthermore, based on actuarial valuation, if the company were to wind up or discontinue operations, the gratuity amount payable to our employees would be Rs. 21 lakh.
Please advise on the correct amount to deposit with LIC to maintain the fund value, which can then be utilized to fulfill gratuity payments to employees who leave the service after completing 5 years of service.
Thanks in advance
From India, Delhi
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I have encountered an issue regarding gratuity valuation:
As of 31st March 2010, based on actuarial valuation, the provision we have created in our balance sheet is Rs. 198,416. Additionally, we have a Group Gratuity scheme with LIC, where the already deposited amount as of 31st March 2010 is Rs. 998,416.
Now, for the period up to 31st August 2010, LIC is requesting an additional deposit of Rs. 10 above what has already been deposited. They refer to this as the Current Service Cost + Additional contribution for the existing fund for the period from 1st August 2009 to 31st August 2010.
My question is, how much should we deposit with LIC to ensure compliance with all regulations and laws?
Furthermore, based on actuarial valuation, if the company were to wind up or discontinue operations, the gratuity amount payable to our employees would be Rs. 21 lakh.
Please advise on the correct amount to deposit with LIC to maintain the fund value, which can then be utilized to fulfill gratuity payments to employees who leave the service after completing 5 years of service.
Thanks in advance
From India, Delhi
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We provide actuarial consultancy in the area of employee benefits, wherein compliance with the Accounting Standards of the Institutes of Chartered Accountants is applied. The most important institute, in the Indian context, is The Institute of Chartered Accountants of India. The relevant accounting standard applicable to accounting for employee benefits issued by The Institute of Chartered Accountants of India is Accounting Standard-15 (Revised 2005), and some of the important employee benefits involving actuarial treatment are:
- Gratuity
- Leave Encashment
- Pension
- Post-Retirement Medical Benefits
Since annual financial statements such as the Balance Sheet and Profit/Loss Statement of your clients are available for the close of the financial year as of 31.03.2013, the services we provide will be needed by you, and we will be happy to assist if required. For further details, we invite you to visit our website at <link no longer exists - removed>.
Tikaram Chaudhary
9211637063
From India, Delhi
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- Gratuity
- Leave Encashment
- Pension
- Post-Retirement Medical Benefits
Since annual financial statements such as the Balance Sheet and Profit/Loss Statement of your clients are available for the close of the financial year as of 31.03.2013, the services we provide will be needed by you, and we will be happy to assist if required. For further details, we invite you to visit our website at <link no longer exists - removed>.
Tikaram Chaudhary
9211637063
From India, Delhi
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We provide actuarial consultancy in the area of employee benefits, ensuring compliance with the Accounting Standards of the Institutes of Chartered Accountants. The most important institute in the Indian context is The Institute of Chartered Accountants of India. The relevant accounting standard applicable to accounting for employee benefits issued by The Institute of Chartered Accountants of India is Accounting Standard-15 (Revised 2005), and some of the significant employee benefits involving actuarial treatment are:
- Gratuity
- Leave Encashment
- Pension
- Post Retirement Medical Benefits
Since the annual financial statements such as Balance Sheet and Profit/Loss Statement of your clients are at hand for the close of the financial year as of 31.03.2013, the services we provide will be needed by you, and we will be happy to offer our services if required. For further details, we request you to visit our website at <link no longer exists - removed>.
Tikaram Chaudhary
9211637063
From India, Delhi
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- Gratuity
- Leave Encashment
- Pension
- Post Retirement Medical Benefits
Since the annual financial statements such as Balance Sheet and Profit/Loss Statement of your clients are at hand for the close of the financial year as of 31.03.2013, the services we provide will be needed by you, and we will be happy to offer our services if required. For further details, we request you to visit our website at <link no longer exists - removed>.
Tikaram Chaudhary
9211637063
From India, Delhi
Acknowledge(0)Amend(0)
We provide actuarial consultancy in the area of employee benefits where compliance with the Accounting Standards of the Institutes of Chartered Accountants is applied. The most important institute, in the Indian context, is The Institute of Chartered Accountants of India. The relevant accounting standard applicable to accounting for employee benefits issued by The Institute of Chartered Accountant of India is Accounting Standard-15 (Revised 2005), and some of the important employee benefits involving actuarial treatment are:
- Gratuity
- Leave Encashment
- Pension
- Post Retirement Medical Benefits
Since annual financial statements such as the Balance Sheet and Profit/Loss Statement of your clients are at hand for the close of the financial year as on 31.03.2013, the services we deal in will be needed by you, and we will be happy to provide our services if needed. For further details, we request you to visit our website. Tikaram Chaudhary 9211637063.
From India, Delhi
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- Gratuity
- Leave Encashment
- Pension
- Post Retirement Medical Benefits
Since annual financial statements such as the Balance Sheet and Profit/Loss Statement of your clients are at hand for the close of the financial year as on 31.03.2013, the services we deal in will be needed by you, and we will be happy to provide our services if needed. For further details, we request you to visit our website. Tikaram Chaudhary 9211637063.
From India, Delhi
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Hi Smitha,
As you are aware, Section 211 of the Companies Act 1956 was amended to the Companies (Amendment) Act 1999, which requires that every Profit and Loss Account and Balance sheet of the Company shall comply with the Accounting Standard recommended by the Institute of Chartered Accountants of India. Accounting Standard 15 (AS 15) was prescribed by the Institute of Chartered Accountants of India for the Valuation of Gratuity and other employee-related liabilities.
The above AS 15 was revised by the Institute of Chartered Accountants in 2005, making it much more elaborate. Moreover, this has been made mandatory for the following organizations from the accounting year commencing after 7th December 2006:
All listed Companies.
All Banks, Financial Institutions, Insurance Companies.
All Business Organizations whose turnover exceeds Rs. 50 Crores, Or are having borrowing including public deposits in excess of Rs. 10 Crores at any time during the year, Or are employing 50 or more persons.
So it's mandatory and really very important to get valuation done from a certified Actuary.
We have a branch office in Bangalore. Kindly contact me on +91-9916086228 for pricing and more details.
Regards,
Manjunath Gupta
From India, Bangalore
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As you are aware, Section 211 of the Companies Act 1956 was amended to the Companies (Amendment) Act 1999, which requires that every Profit and Loss Account and Balance sheet of the Company shall comply with the Accounting Standard recommended by the Institute of Chartered Accountants of India. Accounting Standard 15 (AS 15) was prescribed by the Institute of Chartered Accountants of India for the Valuation of Gratuity and other employee-related liabilities.
The above AS 15 was revised by the Institute of Chartered Accountants in 2005, making it much more elaborate. Moreover, this has been made mandatory for the following organizations from the accounting year commencing after 7th December 2006:
All listed Companies.
All Banks, Financial Institutions, Insurance Companies.
All Business Organizations whose turnover exceeds Rs. 50 Crores, Or are having borrowing including public deposits in excess of Rs. 10 Crores at any time during the year, Or are employing 50 or more persons.
So it's mandatory and really very important to get valuation done from a certified Actuary.
We have a branch office in Bangalore. Kindly contact me on +91-9916086228 for pricing and more details.
Regards,
Manjunath Gupta
From India, Bangalore
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