PAS 26 ACCOUNTING AND REPORTING BY RETIREMENT

BENEFIT PLANS

I. NATURE
PAS 26 applies to the preparation of the financial statements of the retirement benefit
plans.
PAS 26 views a retirement benefit plan as a reporting entity separate from the
employers of the participants in the plan.
PAS 26 deals with the accounting and reporting by the plan to all participants as a
group, rather than individually regarding their retirement benefit rights.
PAS 26 applies to all retirement benefit plans whether formal or informal, contributory or
non-contributory, funded (managed by a trustee) or unfunded (managed by the
employer), and defined contribution plan or defined benefit plan.
Defined contribution plan
The employer’s obligation is usually discharged by making the agreed contributions.
The benefits to be received by employees are dependent on the contributions and
investment income of the fund. The participants therefore are interested in information
about actual contributions and the plan’s investment performance.
Defined benefit plan
The benefits to be received by employees are definite amounts which can be
determined by reference to the plan formula. The employer’s obligation is not
discharged simply by making contributions to a fund, but rather by actually paying the
promised benefits when they become due.

I. MEASUREMENT
Plan assets are measured at fair value or market value. Securities with fixed redemption
values that have been acquired to match the obligations of the plan may be measured
at their final redemption values. If an estimate of fair value is not possible, the reason for
this is disclosed.
II. DISCLOSURE
Aside from a statement of net assets available for benefits and a statement of changes
in net assets available for benefits, the financial statements of either a defined
contribution plan or defined benefit plan shall also provide information on the following:
a. Summary of significant accounting policies.
b. Description of the plan and the effect of any changes in the plan during the
period.
c. Details of any single investment exceeding 5% of net assets or 5% of any
category of investment.
d. Details of any investment in the employer
e. Contributions of employer and employee, if applicable
f. Analysis of benefits paid or payable according to, for example, retirement, death
and disability benefits, and lump sum payments.
g. Funding policies and, for defined contribution plans, investment policies
h. Investment income on the plan assets.
i. Administrative, tax, and other expenses
j. Transfers from or to other plans
k. For defined benefits, the actuarial present value of promised retirement benefits,
including information on significant actuarial assumptions, the method used, the
number of plan participants, a description of the promised benefits, and the
names of the employers and the employee groups covered. These may be
presented either within the financial statements or in a separate report.