Pension posers

Multiple choice questions: In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again

  1. In 2011, the IASB issued amendments to IAS 19 Employee Benefits and at the time, it indicated that there were further matters that needed a more fundamental review of pensions and related benefits. These matters included the issues relating to contribution based promises(CBPs). Which of the following pension plans would be categorised as a CDP?

  2. The Interpretations Committee tried to develop a solution to address accounting for contribution based promises(CBPs), but removed the project from its agenda in May 2014. What is the accounting issue regarding CDP that the Interpretations Committee tried to address?

  3. IAS 19 requires an entity to classify post-employment benefits as defined contribution plans or defined benefit schemes. What is the definition of a defined contribution scheme?

  4. By definition, if a scheme is not defined contribution then it is a defined benefit scheme. Which of the following accounting policies is not used in accounting for defined benefit schemes?

  5. The deficit or surplus on a defined benefit scheme is recognised as a net defined benefit liability (asset) in the statement of financial position, subject to an asset ceiling test. It is argued that the IAS 19 measurement process does not properly reflect differences amongst plans. Why is it thought that the IAS 19 measurement process does not properly reflect differences amongst plans?

  6. The accounting for defined benefit plans is covered by IAS 19 but the accounting for hybrid plans such as CBP, under IAS 19, often results in counterintuitive measurement. Many of these hybrid plans are classified as defined benefit schemes but their risks are quite different. In what way can the risks of CBP schemes be different from those of defined benefit schemes?

  7. The nature of the risk in CBP schemes is not dealt with by IAS 19 and as a result the entity could show an excessive plan deficit because the present value of DBO is much higher than the fair value of the plan assets. What is the main reason why this deficit occurs?

  8. IAS 19 has been questioned from various conceptual viewpoints as IAS 19 measurement basis is quite different from other IFRSs. For example it is difficult to reconcile a pension liability with the definition of a liability in the Conceptual Framework. Which of the following accounting policies, relating to pension accounting,is also inconsistent with the Conceptual Framework?

  9. The main scope of the IASB current research project is accounting for new pension plans that incorporate features that were not envisaged when IAS 19 was issued. They are proposing to undertake a fundamental review of the principles of measurement, and classification in IAS 19. Which of the following areas is not likely to be the subject of the IASB research project?

  10. Another topic under debate concerns whether a pension surplus could be recorded as an asset on the statement of financial position in certain circumstances. IFRIC 14 provides an interpretation of the requirements in IAS 19, addressing when refunds or reductions in future contributions should be regarded as available. What is the purpose of the IASB project in regards to the accounting for such an assets?