Accounting Bell Canada Enterprise Inc

Question: Discuss about theAccountingfor Bell Canada Enterprise Inc. Answer: Introduction In this report, an attempt is made to analyze the accounting policy relating to pension and post-employment benefit of the Bell Canada Enterprise Inc. (BCE) from the annual report of 2014. In Canada the BCE is the largest communication company providing wide range of solution to the residential, business and the whole sale customers. The company is a publicly traded company and is listed in the Toronto Stock Exchange and the New York stock exchange. The main aim of this report is to review the disclosures of the annual report and answer the question relating to the post-employment benefits. DefinedBenefit (DB) Pension Plan The dividend payout policy of BCE is such that the company is able to maintain high level of excess cash. The company uses the excess cash to make voluntary contribution in the defined pension plan. This has helped the company to reduce the volatility of the future funding requirements. In the year 2014, the company has contributed an amount of $350 million as the voluntary DB pension plan for funding the post-employment benefit obligation of the company. On analyzing the annual report of the company, it can be seen that in 2013 the company had a pension surplus of $36 million that was distributed as per Note 9 of the Annual report. In 2014, there was no pension surplus that was distributed as net income. The company has seen an increase in the post-employment benefit requirements for the year ended December 2014. The increase in post-employment obligation is due to lower actual discounting rate of 4% in December 2014 as compared to the 4.9% in the years 2013.In the year ended Decemb er 2013 there was decrease in post-employment benefit obligations. The main reason for such decrease in obligation is the increase in discounting rate to 4.9% as compared to 4.4% in 2012. In case of net deficit, position there is total planned deficit of $2651 million in 2014 of the post-employment obligation (Berman et al., 2014). Reporting of Employment Benefit Assets and Obligations In the consolidated financial statement of the company under the non-current liability the amount of the Post-employment benefit obligations is $2172 million in 2013 and $2772 in 2014. The annual report of the company under Note 22 Post employment benefit plans provides that present value of the post-employment benefit obligation is $22695 million in 2014. The report also states that the fair value of the planned assets is $20080 million in 2014. The post-employment benefit liability in 2014 is $2621 million (Bartram, 2015). There are certain post-employment benefit assets included in the non-current assets. Therefore, it can be seen that the post-employment benefit obligation is $2772 million in the year 2014. The reconciliation statement is given below: Reconciliation (amount in million) Particulars 2014 2013 Post-employment benefit obligation $ (22,695.00) $ (20,313.00) Fair value of Plan assets $ 20,080.00 $ 18,323.00 Plan deficit $ (2,615.00) $ (1,990.00) Assets limit effect $ (6.00) $ (1.00) Post-Employment benefit liability $ (2,621.00) $ (1,991.00) Post-Employment benefit assets included in the non-current Assets $ 151.00 $ 136.00 Post-employment benefit Obligation $ (2,772.00) $ (2,127.00) Table 1: Reconciliation (Source: BCE Annual Report, 2014) The reconciliation above shows that the Post employment obligation is more than the planned assets hence it is a non-current liability. Return on Pension Plan Assets The investment strategy that is followed for post-employment benefit planned assets is to maintain a diversified portfolio of investments. These investments are made in prudent manner so that the security of the fund is maintained. The expected return on plan assets is $773 million in 2013 and $878 million in 2014. However, the actual return on plan assets is $1082 million or 6.4% in 2013 and $2241 million or 12.6% in 2014. Therefore, it can be said that the actual return from the plan assets is more than the expected return (Andonov et al., 2016). Expenses Related to Post Employment Benefit Plans The income statement shows that the company has recognized the interest expenses on the post-employment benefit obligation. The amount of interest expenses recognized in 2014 is $101million and $150 million in 2013. The main component of the expenses are DB pension and OPEBs pension. Expenses of Post-employment benefit plans Particulars 2014 2013 DB Pension $ 35.00 $ 87.00 OPEBs Pension $ 66.00 $ 63.00 Total cost $ 101.00 $ 150.00 Table 2: Expenses of Post-employment benefit plans (Source: created by Author) The main objective of the section 3462 of the Accounting Standard for Private Enterprise (ASPE) is that the current expenses of the employees future benefit is recorded in the financial statement of the company. The amount of expenses that should be recognized under ASPE is the amount of actuarial loss or gain. In 2014, the company should recognize the actuarial loss of $923 million and in 2013; the actuarial gain is $1403 million (Alcover et al., 2014). Post Employment Plans The different types of post-employment pension plan and other benefits that the company has are DB pension plans, DC pension plans and OPEBs. The costs of DB pension plans is $214 million in 2014 and $252 million in 2013. The costs of DC pension plans are $94 million in 2014 and $81 million in 2013. The costs of the OPEBs in 2014 is $9 million and in 2013 is $7 million. The total all costs reported under the total post-employment benefit plan is $305 million in 2014 and $286 million in 2013 (Boisclair et al., 2015). Conclusion Based on the above discussion it can be said that the company is sufficiently contributing in the post-employment benefit plans. It can be said that the company will have sufficient funds so that the obligation can be satisfied as and when it arise. Reference Aguzzoli, R., Geary, J. (2014). An emerging challenge: The employment practices of a Brazilian multinational company in Canada.human relations,67(5), 587-609. Alcover, C. M., Topa, G., Parry, E., Fraccaroli, F., Depolo, M. (2014).Bridge employment: A research handbook. Routledge. Andonov, A., Bauer, R., Cremers, M. (2016). Pension fund asset allocation and liability discount rates. Bartram, S. M. (2015). 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