The Accounting Standard 15 ‘Employee Benefits’ (AS 15), generally deals with all forms of employee benefits all forms of consideration given by an enterprise in exchange for services rendered by employees The objective of this Standard is to prescribe the accounting treatment and disclosure for employee benefits in the books of employer except employee sharebased payments. It does not deal with accounting and reporting by employee benefit plans.

The Standard addresses only the accounting of employee benefits by employers. The Standard makes four things very clear at the outset:
(i) the Standard is applicable to benefits provided to all types of employees (whether fulltime, parttime, or casual staff);
(ii) employee benefits can be paid in cash or in kind;
(iii) employee benefits include benefits provided to employees and their dependents (spouses, children and others); and
(iv) payment can be made directly to employees, their dependent or to any other party (e.g., legal heirs, nominees, insurance companies, trust etc.).
The Standard is based on the premise that the costs associated with employees benefits should be matched with the timing of their service. This requires assessment of the anticipated costs and their timing in future and aligning those costs over the period of their service. For example, a bonus payable to an employee for a longterm service, should ideally be spread over the period of his service and the expectations that the employee is expected to complete that service. Likewise, pension payable to an employee must be recognized as a cost during the service period itself, irrespective of the fact that the pension is payable after the service is completed.

APPLICABILITY
The Standard applies from April 1, 2006 in its entirety for all Level 1 enterprises. Certain exemptions are given to other than Level 1 enterprises, depending upon whether they employ 50 or more employees. This Standard is applicable predominantly for Level 1 enterprises and applied to other entities with certain relaxations.

SHORTTERM EMPLOYEE BENEFITS
• Shortterm employee benefits (other than termination benefits) are payable within twelve months after the end of the period in which the service is rendered.
• Accounting for these benefits is generally straightforward because no actuarial assumptions are required to measure the obligation or cost.
• Shortterm employee benefits are broadly classified into four categories:
(i) regular period benefits (e.g., wages, salaries);
(ii) shortterm compensated absences (e.g., paid annual leave, maternity leave, sick leave etc.);
(iii) profit sharing and bonuses payable within twelve months after the end of the period in which employee render the related services and
(iv) nonmonetary benefits (e.g., medical care, housing, cars etc.)

POST EMPLOYMENT BENEFITS: DEFINED CONTRIBUTION VS DEFINED BENEFITS
The accounting treatment and disclosures required for a postemployment benefit plan depend upon whether it is a defined contribution or a defined benefit plan. In addition to addressing defined contribution and defined benefit plans generally, the Standard also gives guidance as to how its requirements should be applied to insured benefits, multiemployment benefit plans.
1. Defined contribution plans (DCP) are postemployment benefit plans under which an enterprise pays fixed contributions into a separate fund and will have no obligation to pay further contributions. Under defined contribution plans, actuarial risk (that benefits will be less than expected) and investment risk (that assets invested will be insufficient to meet expected benefits) fall on the employee. A common example of Defined Contribution plans is Provident Fund.
2. Defined benefit plans are postemployment benefit plans other than defined contribution plans. In defined benefits plans, the actuarial and investment risk fall on the employer.
3. In defined contribution plans, the contribution is charged to income statement, whereas in defined benefit plans, detailed actuarial calculation is performed to determine the charge.