PSAK 24 is a financial accounting standard that addresses employee benefits provided to employees, whether in the form of cash or non-cash benefits. These employee benefits involve a number of economic rights as part of the remuneration package, such as pensions, post-employment benefits, and other long-term benefits.
PSAK 24 provides comprehensive guidance for business entities in preparing their financial statements. By adhering to this standard, companies can present accurate and transparent information regarding their financial commitments to employees. A thorough understanding of PSAK 24 helps companies manage employee benefits appropriately and comply with applicable financial accounting standards.
However, in line with global business developments, international regulatory standards, or stakeholder needs, changes in nomenclature are often required, such as the transition from PSAK 24 to PSAK 219. By updating the nomenclature, it is hoped that accounting standards remain relevant and accountable in addressing the dynamics of the business and financial world.
About PSAK 24 and PSAK 219
As previously mentioned, PSAK 24 is the Indonesian financial accounting standard that regulates employee benefits for their services during the employment period. This includes benefits such as salaries, allowances, leave, post-employment benefits, and other welfare benefits.
This standard provides guidelines regarding the recognition, measurement, and disclosure of employee benefits, including the liabilities that must be recognized by the company. PSAK 24 helps companies disclose employee benefits in accordance with applicable accounting principles and complies with Law No. 6/2023 (UU Nomor 6 Tahun 2023) on the Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation (Penetapan Peraturan Pemerintah Pengganti Undang-Undang Nomor 2 Tahun 2022 tentang Cipta Kerja).
However, with the development of International Financial Reporting Standards (IFRS), the nomenclature of PSAK 24 has been changed to PSAK 219. This nomenclature change will be effective starting from January 1, 2025.
Key Differences Between PSAK 24 and PSAK 219
PSAK 24 has long served as the reference for regulating employee benefits. This accounting standard has provided a framework for the recognition, measurement, and presentation of liabilities and costs related to employee benefits in the company’s financial statements. However, with the issuance of PSAK 219, there are several crucial changes that accounting and finance professionals need to be aware of. Here are some of the differences between the two:
1. Recognition and Measurement of Employee Benefit Liabilities
PSAK 219 introduces a new method for measuring employee benefit liabilities, including post-employment benefits. This standard emphasizes the application of more realistic economic and demographic assumptions to estimate the present value of employee benefit liabilities.
2. Disclosure and Transparency
Under PSAK 219, disclosure requirements are expanded, requiring companies to provide more detailed information about the characteristics of employee benefit programs, the assumptions used in liability assessments, and the risks associated with those programs. The aim is to give stakeholders a more comprehensive understanding of the financial consequences of employee benefits for the company.
3. Risk Management
PSAK 219 also highlights the importance of a more comprehensive risk management approach for employee benefit programs. Companies are expected to be more proactive in identifying, measuring, and managing risks, including operational, market, and credit risks.
Impact of Nomenclature Change for Companies
The transition from PSAK 24 to PSAK 219 will have a significant impact on how companies present and manage employee benefits. In terms of financial statements, changes in employee benefit liabilities and costs will affect the financial position and operational results. Additionally, companies are required to be more transparent in presenting information about employee benefits to increase investor confidence and other stakeholders.
From a management perspective, this standard encourages companies to adopt a more strategic approach in managing employee benefit programs. A deeper understanding of risk management can also help entities optimize benefit costs and reduce fluctuations in financial statements.
In essence, this transformation not only affects how employee benefits are presented in financial statements but also how risks and related costs are managed.
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