Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p44
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 44/76)
Character Range: 157269–160366

benefit member liabilities as vested benefits or in accordance with the approach in AASB 119.
(a)                   A vested benefits approach is inconsistent with the going concern concept because it is somewhat akin to a liquidation value and therefore not consistent with the long-term nature of defined benefit member liabilities and the approaches required under Australian Accounting Standards for measuring similar liabilities, such as insurance contract liabilities.
(b)                   A superannuation plan with an employer-sponsor that applies AASB 119 may still incur additional preparation and audit costs in applying the approach in AASB 119 for defined benefit member liabilities where:
(i)                     the employer-sponsor's reporting date is different from the superannuation entity's reporting date; or
(ii)                   there is a multi-employer plan and the criteria in AASB 119 are met that enable the employer-sponsor to account for the plan as if it were a defined contribution plan.
BC124        The AASB also considered that measuring defined benefit member liabilities in accordance with the approach in AASB 119 for defined benefit member liabilities within the APRA reporting timeframe (within four months of period end) may pose challenges for some superannuation entities.  However, the AASB decided not to provide special guidance on materiality in respect of measuring defined benefit member liabilities to facilitate plans meeting reporting deadlines because it would arguably need to be rules-based, which is contrary to the AASB's general approach.
BC125        The AASB noted AASB 119 permits the use of particular estimates, averages or computational shortcuts in measuring defined benefit member liabilities in some cases.  Accordingly, an entity would be permitted to use those shortcuts that it considers appropriate (including, but not limited to, the shortcut techniques used by employer-sponsors of defined benefit members under AASB 119), provided that the amount calculated using the shortcut techniques is not materially different from the amount that would otherwise have been determined using the comprehensive approach.
BC126        In light of the comments and recommendations of respondents, the AASB decided that, on cost-benefit grounds, ED 223 should propose that a superannuation plan be required to measure its defined benefit member liabilities in accordance with the approach in AASB 119 (without modification) for defined benefit member liabilities.
BC127        In relation to ED 223, respondents reiterated many of the points made above in relation to the ED 179 proposals.  In particular, many regard the requirements in AASB 119 in respect of defined benefit member liabilities to be flawed and could identify costs of applying the AASB 119 model in a superannuation entity context and few benefits.  In response, the AASB conducted further targeted outreach on the cost and timeliness of implementing a principle similar to the requirements in AAS 25, but with more direction on its implementation designed to overcome