Annual Report 2012 - IOI Group

NOTES TO THEFINANCIAL STATEMENTS5. SIGNIFICANT ACCOUNTING POLICIES (Continued)5.19 Employee Benefits5.19.1 Short term employee benefitsWages, salaries, other monetary and non-monetary benefits are accrued in the period in which the associatedservices are rendered by employees of the Group.Short term accumulating compensated absences such as paid annual leave are recognised as an expense whenemployees render services that increase their entitlement to future compensated absences. Short term nonaccumulatingcompensated absences such as sick leave are recognised when absences occur.Bonuses are recognised as an expense when there is a present, legal or constructive, obligation to make suchpayments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.5.19.2 Retirement benefitsThe Group has various retirement benefit plans in accordance with local conditions and practices in the countriesin which it operates. These benefit plans are either defined contribution or defined benefit plans.A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity(a fund) and will have no legal or constructive obligations to pay further contributions if the fund does not holdsufficient assets to pay all employee benefits relating to employee service in the current and prior periods. A definedbenefit plan is a pension plan that defines the amount of pension benefit to be provided, usually as a function ofone or more factors such as age and years of service.5.19.2.1 Defined contribution plansThe Company and its subsidiaries incorporated in Malaysia make contributions to a statutory providentfund. Contributions to defined contribution plans are recognised as an expense in the period in which theemployees render their services. Once the contributions have been paid, the Group has no furtherpayment obligations.5.19.2.2 Defined benefit plansThe Group operates various defined benefit plans for eligible employees of the Group. The amountrecognised as a liability in respect of the defined benefit plan is the present value of the defined benefitobligations at the end of the reporting period less the fair value of plan assets, together with adjustmentsfor unrecognised actuarial gains and losses and unrecognised past service cost.If the amount calculated results in an asset, the Group measures the resulting asset at the lower of theamount calculated and the net total of any cumulative unrecognised actuarial losses and past service costand the present value of any economic benefits available in the form of refunds from the plan orreductions in future contributions to the plan.The Group determines the present value of the defined benefit obligations and the fair value of the planassets with sufficient regularity such that the amounts recognised in the financial statements do not differmaterially from the amounts that would be determined at the end of the reporting period.150IOI CORPORATION BERHADAnnual Report 2012