Actuary reports in accordance with IAS 19

   For companies whose accounting policies are aligned with IAS/IFRS, our team provides acturial calculations related to the severence pay upon regular retirement and jubilee rewards.

   In the Republic of Serbia, severance pay upon regular retirement is defined by the Labor Law, which prescribes its minimum amount – double amount of the average salary in Serbia (a company, however, can set this employee benefit at a higher level than this by its own collective labor agreement act). The purpose of  the calculation of provision for severance pay is to realistically estimate future outflow based on this legally defined expense and to distribute the expense evenly throughout the entire period during which it is generated. It means the this expense does not occur at the moment of retirement and actual payment but during the whole period of an employee’s work engagement within the company. That is where actuarial valuation methods and actuarial assumptions take place. We calculate provisions for the severance pay upon retirement based on the Projected Unit Credit Method (PCU Method) which views each period of an employee’s work engagement (usually a calendar year) as an additional unit of an employee’s entitlement to the defined severance pay.

   Jubilee awards as the common type of long-term income according to IAS 19 in the Republic of Serbia. According to the article 120 of the Labor Law, a company has the right to determine this type of employee benefit by its collective labor agreement or other act and if it does so, it has the obligation to make reservation for these expenses. The acturial calculation is based on the same valuation methods and assumptions as for the severence pay upon retirement.

   Performed acturial calculations are presented to our clients in form of an actuary report which contains in particular  definitions of methods, assumptions and parameters applied, table of provisions calculated for each employee, information for disclosure (in Notes to the financial statements) table and proposed resulting bookkeeping entries.

   Our team also provides other types of actuarial calculatons and reports.