08-22-2009, 02:25 AM
Querry 1 To my understanding funded gratuity is the employee benifit scheme for which, a separate fund, trust or like arrangement has been made. Like OGDCL, Mari Gas and many other has arranged separate pension fund, providend fund and gratuity funds.
(Separate Board of Trustees In this case the related liabilities and assets are not recorded in books of the Company.( Usually Liability of the company is discharged when it pays to the fund, However it also depends upon whether it is defined contribution or defined benefit plan)
Whereas, Non funded gratuity is the plan where no separate arrangement as explained above has been made and all amount payable to employees is recorded as liability in the books of the company and like wise the related assets.
Valuation of the liabilities is made by the acturies which is then recorded in books of account of the company by debiting the provision and crediting the liability account. (Actuarial valuations are required becasue the liability is to be based on many assumptions, like the employee turnover, what would be his salary when the employee would leave)
Regards
Waqas Shabbir
(Separate Board of Trustees In this case the related liabilities and assets are not recorded in books of the Company.( Usually Liability of the company is discharged when it pays to the fund, However it also depends upon whether it is defined contribution or defined benefit plan)
Whereas, Non funded gratuity is the plan where no separate arrangement as explained above has been made and all amount payable to employees is recorded as liability in the books of the company and like wise the related assets.
Valuation of the liabilities is made by the acturies which is then recorded in books of account of the company by debiting the provision and crediting the liability account. (Actuarial valuations are required becasue the liability is to be based on many assumptions, like the employee turnover, what would be his salary when the employee would leave)
Regards
Waqas Shabbir
