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Normandin Beaudry

The new disclosure requirements regarding employee future benefits


There, in black and white

Bulletin NB Vol. 7 N. 7, June 2004

In April 2004 the Accounting Standards Board (AcSB) of the Canadian Institute of Chartered Accountants (CICA) issued the final version of the amendments to the disclosure requirements regarding employee future benefits. These changes will apply to fiscal years ending on or after June 30¸ 2004. There are also new disclosure requirements for interim (quarterly) financial statements.

As in the past¸ some of the disclosure requirements do not apply to entities that are not public enterprises (those quoted on the stock market). Moreover¸ no changes were made in regard to multiemployer plans.


In addition to harmonizing Canadian disclosure standards with U.S. and international standards¸ the primary purpose of AcSB´s review process was to improve transparency regarding the measurement of costs relating to employee future benefits. In fact¸ following the poor performance of the markets in 2001-2002 and the decline in the discount rates used to determine the accrued benefit obligation¸ financial statement users expressed numerous concerns and a need for more information about the assets and the obligation of existing plans.

The AcSB therefore decided to do a thorough review of the current disclosure standards contained in paragraphs 150 to 163 of Section 3461 of the CICA Handbook¸ knowing that broader information disclosure would increase costs.

Summary of the main amendments to the current disclosure requirements

The amendments to the paragraphs of Section 3461 include some additions and many more details relating to information disclosure in financial statements. Following is a summary of the main amendments to these paragraphs:

  • More detailed description of the accounting methods used¸ especially to determine the value of the obligation;
  • Description of the type of plan;
  • Measurement date used to determine assets and the obligation;
  • Dates of the most recent and next actuarial valuations;
  • Disclosure of the components of costs recognized for the period¸ showing first the amounts arising from occurrences during the period (modification or actuarial gains) and then the amounts postponed which will be amortized in subsequent periods;
  • Balance sheet classification of asset or liability (that is under which heading);
  • Reconciliation of the obligation to the balance sheet asset or liability;
  • Disclosure of the contributions paid by the employer¸ shown separately for defined benefit and defined contribution plans¸ direct payments to employees and payments to suppliers (insurers);
  • Asset allocation percentage by investment category;
  • Assumptions used presented in tabular form;
  • Impact of a 1% variance in the health care cost trend rate for post-retirement benefit plans.

Interim financial statements

Given the increased interest in employee future benefits¸ the AcSB decided that interim financial statements must show the total cost for the interim period and for the fiscal year to date.

Implications for your financial statements

As soon as possible¸ you must ensure that your financial statements contain all the information now required. You should do a complete review of the information disclosed regarding your employee future benefit plans before issuing your next financial statements.


Please feel free to contact us for additional information.

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