ASBE No. 09
Active
Employee Benefits
Employee Benefits is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
All forms of consideration for employee service
ASBE No. 9 governs ALL forms of CONSIDERATION given by an ENTERPRISE in EXCHANGE for SERVICES rendered by EMPLOYEES, or for the TERMINATION of employment – BROADLY paralleling IAS 19's OWN four-category STRUCTURE internationally (short-term BENEFITS, post-employment BENEFITS, termination BENEFITS, other LONG-term benefits), though the PRACTICAL emphasis DIFFERS significantly GIVEN China's PREDOMINANTLY state-run PENSION system (Section 4).
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Scope – Four Categories of Employee Benefits
Mirroring IAS 19's structural categories
CategoryExamples
Short-term employee benefitsWages, bonuses, statutory social insurance contributions, paid leave
Post-employment benefitsBasic pension insurance contributions; supplementary enterprise annuity (see ASBE No. 10)
Termination benefitsPayments made on termination of employment before the normal retirement date
Other long-term employee benefitsLong-service awards and similar benefits not falling into the other three categories
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Short-Term Employee Benefits
Recognised as an expense and liability as service is rendered
SHORT-TERM employee BENEFITS – wages, BONUSES, and the ENTERPRISE'S own STATUTORY social INSURANCE contributions (MEDICAL, unemployment, WORK injury, MATERNITY insurance, PLUS the housing PROVIDENT fund) – are RECOGNISED as a LIABILITY and an EXPENSE in the PERIOD the EMPLOYEE renders the RELATED service, UNDISCOUNTED, given their SHORT-term settlement HORIZON.
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Post-Employment Benefits – the State Basic Pension System
Contributions to a state-managed pool, expensed as incurred
The OVERWHELMING majority of Chinese ENTERPRISES participate in the STATE'S mandatory BASIC PENSION INSURANCE system – a STATE-managed, POOLED arrangement into WHICH the ENTERPRISE makes REGULAR contributions, WITHOUT retaining ANY further LEGAL or CONSTRUCTIVE obligation BEYOND those CONTRIBUTIONS. This is TREATED, in SUBSTANCE, as a DEFINED CONTRIBUTION plan – CONTRIBUTIONS are SIMPLY EXPENSED as INCURRED, WITH no ACTUARIAL valuation REQUIRED, CONSISTENT with IAS 19's OWN defined contribution TREATMENT internationally.
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Defined Benefit Plans – a Genuinely Narrow Category in China
A structural feature of ASBE 9 that is rarely triggered in practice
THIS Standard DOES contain a FRAMEWORK for DEFINED BENEFIT plans (REQUIRING actuarial VALUATION, discounting, and the SAME general MECHANICS found under IAS 19 internationally) – BUT, given the DOMINANCE of the STATE'S basic PENSION system DESCRIBED above, GENUINE corporate DEFINED BENEFIT pension OBLIGATIONS are a GENUINELY NARROW, comparatively RARE feature of Chinese enterprise ACCOUNTING, in CONTRAST to jurisdictions (SUCH as JAPAN or many WESTERN economies) WHERE legacy CORPORATE defined BENEFIT plans remain WIDESPREAD and MATERIAL.
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Termination Benefits
Recognised when the entity can no longer withdraw the offer
TERMINATION benefits are RECOGNISED as a LIABILITY and EXPENSE at the EARLIER of: WHEN the ENTERPRISE can NO LONGER WITHDRAW its OFFER of THOSE benefits, or WHEN the ENTERPRISE recognises RELATED restructuring COSTS – CONSISTENT with IAS 19's OWN termination benefit RECOGNITION trigger internationally.
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Other Long-Term Employee Benefits
A residual category for benefits not settled within twelve months
OTHER long-TERM employee BENEFITS – such as LONG-SERVICE awards NOT expected to be WHOLLY settled WITHIN twelve MONTHS of the RELATED service being RENDERED – are MEASURED on a BASIS broadly SIMILAR to defined BENEFIT post-employment BENEFITS, though WITH a SIMPLIFIED recognition APPROACH for actuarial GAINS and LOSSES.
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Worked Example – Recognising Short-Term Compensation
A straightforward period expense
Example: Monthly wages and bonus accrual
A company's employees earn RMB 8,000,000 in wages for the month, plus an anticipated year-end bonus accrual of RMB 1,200,000 for the same month's service.
The company recognises a TOTAL short-term employee benefit EXPENSE and LIABILITY of RMB 8,000,000 + RMB 1,200,000 = RMB 9,200,000 for the MONTH, RECOGNISED as the RELATED service is RENDERED, REGARDLESS of WHEN the AMOUNTS are ACTUALLY paid.
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Worked Example – State Basic Pension Contributions
A defined contribution expense, with no further obligation
Example: Monthly statutory pension insurance contributions
A company is required to contribute 16% of its total monthly payroll of RMB 10,000,000 to the state's basic pension insurance pool.
The company EXPENSES RMB 10,000,000 × 16% = RMB 1,600,000 for the MONTH as INCURRED – WITH NO FURTHER obligation or ACTUARIAL valuation REQUIRED, since the STATE pension SYSTEM is treated as a DEFINED CONTRIBUTION arrangement from the ENTERPRISE'S perspective.
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Disclosure Requirements
What ASBE No. 9 requires
Amounts of employee benefits payable, by categoryBasic pension insurance and other social insurance contributions recognised as expenseBasis for any defined benefit obligation, where applicable
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether an arrangement is genuinely a defined contribution or defined benefit planTiming of termination benefit recognition
SIGNIFICANT ESTIMATES
Bonus accruals and expected short-term compensation amountsActuarial assumptions, where a genuine defined benefit obligation exists
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Relationship to IAS 19
Comparison – ASBE 9 vs IAS 19
FeatureASBE 9IAS 19
Four-category structureSame categoriesSame categories – converged
Practical dominance of defined benefit plansGenuinely rare – state pension system dominatesHistorically widespread in many jurisdictions
The ACCOUNTING framework is thoroughly CONVERGED – the MEANINGFUL practical DIFFERENCE lies in HOW frequently each CATEGORY actually ARISES, given China's STATE-dominated pension LANDSCAPE.
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Statement Mapping
Where every employee benefit event lands
EventStatement(s) affectedNotes
Short-term/post-employment benefit expenseBS ISLiability and expense recognised as service is rendered
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 10Enterprise Annuity Fund – governs the supplementary, voluntary occupational pension vehicle some enterprises establish in addition to the state basic pension system
ASBE No. 11Share-based Payment – governs equity-based employee compensation, addressed separately from this Standard's general employee benefits scope
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Quick-Reference Glossary
Basic pension insurance (基本养老保险)
China's mandatory, state-managed pension system, into which enterprises make contributions treated as a defined contribution arrangement.
Housing provident fund (住房公积金)
A mandatory employer/employee-funded housing savings scheme in China, treated as a short-term employee benefit.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 9 Employee Benefits issued
Operative for periods beginning on or after 1 February 2007