PEF Annual Report 2012 - Punjab Education Foundation

Punjab Education Foundation
Other than the aforesaid standards, interpretations and amendments, the International Accounting
Standards Board (IASB) has also issued the following standards which have not been adopted by the
Securities and Exchange Commission of Pakistan:
IFRS 1 – First Time Adoption of International Financial Reporting Standards
IFRS 9 – Financial Instruments
IFRS 10 – Consolidated Financial Statements
IFRS 11 – Joint Arrangements
IFRS 12 – Disclosure of Interests in Other Entities
IFRS 13 – Fair Value Measurement
The amendments to IAS 19 Employee Benefits are effective for annual period beginning on or after
January 1, 2013. The amendments eliminate the corridor approach and therefore require an entity to
recognize changes in defined benefit plans obligations and plan assets when they occur. All actuarial
gains or losses in other comprehensive income arising during the year are recognized immediately
through other comprehensive income. The amendments also require additional disclosures and
retrospective application with certain exceptions. Management anticipates that the amendments will be
adopted in the Foundation’s financial statements for annual period beginning on or after January 1,
2013, and the application of amendments may have impact on amounts reported in respect of defined
benefit plans.
The potential impact of the said changes on the financial position and performance for the year 2012 is
estimated as under:
Amounts (Rs.)
Net decrease in other comprehensive income
12,575,341
Increase in deferred liabilities:
Gratuity 7,237,163
Pension 5,338,178
6 Significant accounting judgments, estimates & assumptions
The preparation of financial statements in conformity with approved accounting standards requires management
to make estimates, assumptions and use judgments that affect the application of policies and reported amount of
assets and liabilities and income and expenses. Estimates, assumptions and judgments are continually evaluated
and are based on historical experience and other factors, including reasonable expectations of future events.
Revision to accounting estimates are recognized prospectively commencing from the period of revision. The
areas where various assumptions and estimates are significant to the Foundation’s financial statements or where
judgments were exercised in application of accounting policies are as follows:
- Residual values of property and equipment (note 4.3 and 8)
- Staff retirement benefits (note 4.1 and 20)
Useful lives & residual values of property & equipment
The Foundation reviews appropriateness of the rate of depreciation, useful lives and residual values used in the
calculation of depreciation. Further, where applicable, an estimate of the recoverable amount of assets is made
for possible impairment on an annual basis. In making these estimates, the Foundation uses the technical
resources available with the Foundation. Any change in the estimates in the future may affect the carrying
amount of respective item of property and equipment with corresponding effects on the depreciation charge and
impairment.
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