Defined benefit net liability
A defined benefit net liability generally reflects the present value of the defined benefit obligation less the fair value of plan assets, subject to IAS 19 requirements. Estimation involves actuarial assumptions and may require specialist input. The auditor evaluates the obligation, plan assets, methods, assumptions and disclosures.
Worked example
If a plan’s obligation is 1,000 and plan assets are 700, the net defined benefit liability is 300 before considering other relevant IAS 19 requirements.
Common mistake
Do not equate the gross obligation with the net liability when the plan has assets.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |