Exposure Draft on Review of GRAP 25 Employee Benefits (ED 184): What are the potential implications of the proposed changes and how will they be implemented?

What are the potential implications of the proposed changes?

The proposed changes mostly affect defined benefit plans. Although initial engagements with stakeholders revealed that defined benefit plans are being phased out, there are entities that still have material defined benefit plans for some existing members. The proposed changes would require entities to identify, classify and present the information on defined benefit plans differently in future.

Entities that provide other long-term employee benefits and termination benefits may currently disclose limited information about these benefits as no specific disclosure requirements are included in GRAP 25. Although the Exposure Draft still does not require specific information to be disclosed about these employee benefits, disclosure objectives have been added. Entities would need to consider whether the disclosure requirements in other Standards of GRAP would meet the objectives, for example GRAP 20 on Related Party Disclosure, GRAP 1 on Presentation of Financial Statements and GRAP 19 on Provisions, Contingent Assets and Contingent Liabilities. 

When will the changes become effective?

The Board is proposing an effective date of 1 April 2023, to allow entities sufficient time to adopt the new requirements.

How will the changes be implemented?

The proposed transitional provisions require entities to apply the changes retrospectively, with some exceptions. This means that entities would be required to apply the new requirements for the first time in their 2023/24 financial statements, for both the 2023/24 and 2022/23 (comparative) information.

The public consultation process will assess the effect of the proposed changes on existing employee benefit plans, and whether the proposed transitional provisions are appropriate.

Where can the ED be accessed and how can you provide comment?

ED 184 has been published on the ASB’s website and can be accessed here. Comment can be submitted via the website or to the Secretariat of the ASB at info@asb.co.za by 30 November 2020.

The views expressed in this article are those of Secretariat and not the ASB Board.