02-23-2009, 06:23 PM
Star,
It depends upon what corporate status it has under 4th or 5th Scedule to the Companies Ordinance 1984 and what structure of compensated absences it has for its employees.
First thing is the structure/nature of benefit. If one years leave are paid in next year without any alteration or accumulation, no actuarial valuation is required, regardless of whatever entity it is.
However, if leaves have to be accumulated over certain numberof years, or until the final retirement or LPR, or after one or more years with some revision to latest salary etc then actuarial valuation is required. Now which entities are obliged to get actuarial valuation and which are not is the second question in this scenario.
All listed companies have to comply with IFRSs (notified by SECP), so all listed companies and the companies to which 4th schedule applies will have to get the valuation done. You may appreciate that 4th schedule applies on listed companies as well as their subsidiaries.
In case of unlisted public companies or private limited companies, we have to take guidance from the relevant reporting frameworks. 5th scheduel to the CO84 defined three types of entities i.e. significant entities, medium sized entities and small sized entities by specifying the criteria to establish which company falls under what category.
Significant entities are obliged to follow all IFRSs/IASs, so they are also obliged to get the actuarial valuation done, if it is required.
Medium sized entities are not forced to follow IFRSs/IASs although these are encouraged to do so. However, the local standard developed by ICAP and notified by SECP for such entities encourages with all the emphasis to get the actuarial valuation done wherever it is required. However, it also provides some relaxation on certain basis, if the differences are not expected to be substantial.
Small sized entities are neither required not emphasized to follow IFRSs/IASs and the local standard applicable to them does not stipulate any requirement for such actuarial valuations.
However, any entity that wants to follow total IFRSs/IASs (notified by SECP) is always encouraged to do so. While doing so, no entity can make a partial compliance. When financials are disclosed to be compliant of IFRSs (applicable in Pakistan), these have to comply them in all respects.
I hope you will deduce a proper clarification from this scattered post.
Regards,
KAMRAN.
