In response to the global financial crisis, the International Accounting Standards Board has published a set of proposals to amend the discount rate for measuring employee benefits.

IAS 19, “Employee Benefits,” requires an entity to determine the rate used to discount employee benefits with reference to market yields on high-quality corporate bonds. However, when there is no deep market in corporate bonds, an entity is required to use market yields on government bonds instead. The global financial crisis has led to a widening of the spread between yields on corporate bonds and yields on government bonds. As a result, entities with similar employee benefit obligations may report them at very different amounts.

To address the issue, the IASB proposes eliminating the requirement to use yields on government bonds. Instead, entities would estimate the yield on high-quality corporate bonds.  If adopted, the amendments would ensure that the comparability of financial statements is maintained across jurisdictions, regardless of whether there is a deep market for high-quality corporate bonds. 

In view of the urgency of the issue, the IASB has shortened the period for comments on the exposure draft, and it intends to allow entities to adopt the amendments that arise from this exposure draft in their December 2009 financial statements.

The proposals are set out in the exposure draft Discount Rate for Employee Benefits (proposed amendments to IAS 19), which is open for comment until Sept. 30 2009. The exposure draft is available on the “Open for Comment” section on

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