Since the global financial crisis, falling bond and equity markets have led to reporting
entities such as Rio Tinto, Qantas, Westpac and AMP disclosing significant multi-million
dollar deficits on the various defined benefit superannuation schemes they sponsor for
(a) Your friend has commented that the deficits reported in the statements of financial
position of sponsoring employers are based on the accounting disclosures required
by AASB 119. To what requirements of AASB 119 is your friend referring? Explain.
(b) Your friend has also commented that a reported net defined benefit obligation
does not necessarily mean that the defined benefit plan’s assets do not cover its
current defined benefit obligations. Do you agree with this statement? Explain.