Audit Services Summary of IAS 26 Accounting and Reporting By Retirement Benefit Plans

According to IAS 26, retirement benefit plans account and report to all project members as a group, not to individual members of a plan based on their benefits. Forms and contents for general-purpose financial reports for retirement benefit plans are defined in the Standard.  So, what should entities and audit services in Dubai, UAE know about IAS 26 accounting and reporting by retirement benefit plans? Read on.

The  IAS 26 standard pertains to the following:

  • Defined contribution plans .

A retirement plan where benefits are determined by the contributions made and the investment earnings.

  • Defined benefit plans.

The formula company audit teams use to determine benefits is based on the employees’ earnings and years of service.

IAS 26 and IAS 19 deal with employee benefits, so these Standards can sometimes be confused. The difference is that IAS 26 deals with the financial reporting considerations for the plan itself. At the same time, IAS 19 focuses on how employers account for employee-earned benefits in the financial statements.

As a result, the Standards are somewhat related. Still, there won’t be any direct parallel between amounts reported by benefit plans and employers due to IAS 19.

Crucial Definitions Regarding IAS 26

Retirement Plans

They can be described as arrangements where employers in Dubai and UAE offer employees post-employment benefits as either monthly, annual, or lump-sum income.

Defined Contribution Plans

These are retirement plans where retirement benefits payable to those who participate are determined by adding contributions to the fund and the revenue accrued by the plan by investing the amount received from employees and employers via donations.

Defined Benefit Plans

These are benefits payable to employees, calculated via a formula mainly based on the service years the employee has accomplished or earnings or both.


Under IAS 26, Audit firms in Dubai and UAE can define these as assets transferred to the retirement plan that is mostly regarded as independent from the Dubai entity that has established the fund initially to meet obligations associated with payment of post-employment benefits employees.

Here are terms that audit services use, especially in the context of IAS 26:


These individuals qualify to obtain benefits based on the terms and conditions of the benefit plan. They are also called members of a benefit plan.

Net Assets Available for Benefits

Dubai financial auditors can calculate this benefit for a retirement plan by subtracting liabilities of the retirement without including the present amount of benefits from the benefit plan’s assets.

Vested Benefits

These are benefits whose payment, based on the plan’s terms, is not reliant on continued employment.


These are parties that handle assets of a fund that a Dubai company has made to establish and operate a retirement benefit plan for its employees.

Read also : IFRS 15 And Old Revenue Recognition Guidelines In Dubai

Defined Contribution Plan

In financial statements, financial audit professionals should include information on the change in the plan’s net assets available for retirement benefits, as well as its financing policy.

Future benefits of a participant in this retirement plan are calculated by adding the investment income of the plan and the total of employee and employer contributions.

Accounting and reporting play a significant role in DCPs because they provide regular investment planning and performance updates. Typically, the objective as mentioned above is satisfied by preparing and delivering to all relevant parties financial statements that include the following:

An overview of the contributions plan’s significant activities during the period under review, as well as its terms and conditions and memberships, and the impact of any changes to those activities.

Reports detailing the performance of the plan’s investments and the plan’s financial position at the end of the period. A description of the plan’s policies for investing during a specific period.

Defined Benefit Plans

A plan of this kind should include the following financial reports:

This statement illustrates:

  • All benefits-eligible net assets.
  • An estimate of the total expected post-employment benefits. It is essential to distinguish between non-vested and vested benefits.
  • If any of the following are included in an income statement as net assets available for benefits:
  • A report detailing all expected post-employment benefits.
  • It is crucial to identify whether the benefits are vested or non-vested.

There will be a note in the actuarial valuation report that will be included with the plan’s financial statements and a reference to those mentioned above.

The latest valuation can be used as a base if an actuarial value of expected post-employment benefits is unavailable at the end of the plan’s fiscal year.

In the plan’s financial reports, it is essential to disclose the last valuation date.

According to the terms and conditions of the plan, post-employment benefits are calculated using the post-employment benefits that employees were promised based on their services to date, together with an explanation of the assumptions and the basis used to calculate the benefits.

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