Introduction

A widely recognized phenomenon of the 20th century has been the increasing life expectancy of people in almost all countries of the world. As people, live longer, they must deal with the problem of financing their extended retirement year. Many of their people also dream of becoming millionaire. Increasingly, however, more and more of these people are finding that you do not have to win on a game show to have their dream come true. In the past decade, tax favored retirement, have produced a growing number of 410K Millionaire. The popularity of these plans including their flexibility and the incentives they produce or provide for individual savings has even caught the eye of Congress as it debates ways to show up the Social Security System (SSS). Recent estimates indicate that SSS will be bankrupt by the year 2002. On the proposal for dealing with the retirement shortfall is to allow workers to allocate part of their Social Security taxes to private investment funds, similar to 410K. So, who wants to be a millionaire? More and more people are saying I do and many will be able to realize that dream by taking advantage of tax incentive and by taking control of their own retirement income planning. As the opening story indicator, many employees are increasingly concerned about retirement planning. To attract a high reward quality employee, most companies have established pension plans to help employees meet their retirement saving goals. These entities offer investment program for employee contribution and some also contribute employees retirement funds as part of the overall compensation package. The substantial growth of these plans, both in number of employees covered and the dollar amounts of retirement benefits has increased the significance of pension costs in relation to companys financial position. But complex accounting issues associated with employee compensation do not begin when an employee retires. Stock compensation has become an increasingly complex and controversial issues. In addition, companies must

address issues associated with the compensation of performance bonuses and liabilities associated with sick and vacation pay. Finally, the compensation issues associated with payroll, such as the differing employee and employee payroll taxes, introduced added complexity to the topic of employee compensations. The purpose of this report is twofold: to broad the knowledge of the students about employee benefits, and to help employees effectively manage their own benefits. First, this report will help the students especially the Bachelor of Science in Accountancy students to have a better understanding of the essence of employee benefits and to enhance our knowledge about this. As BSA students, it is needed to know more about employee benefits because it is one of the topics in Financial Accounting. These employee benefits use a new accounting approach or treatment that should be updated for the preparation of taking board exam. In increasing the knowledge about employee benefits, it can help the readers today but also in the future because someday we can be an employee or an employer who manages our own benefits. The readers will also be informed about the issues of employee benefits. Through this, it can help them to be aware of those issues. This study will also help them elaborate the different kinds of employee benefits. Second, this study will help the employees to effectively manage their own benefits and make benefits selection that best meet their own individual needs. If employees know these benefits, it can help them manage their transactions, provide guidance of financial and in their retirement plans. The employee must know the benefits that they will get from the company where they work for them to know if these benefits are less or enough for them. If the benefits that they have received are not right or less than the normal benefits that they should have, they can complain against their employer. Also, it will help the employees to decide what benefits they will need according to their work. The coverage of this research will focus more on the accounting treatment regarding employee benefits. To understand more of the topic, we need to limit the topic to five major parts namely (1) history, (2) kinds, (3) law, (4) accounting

procedures, and (5) issues. First is the history. The researchers feel the need to know more about the background and continuous development of employee benefits. The demands of modern day living in relation to the job incentives they receive from the entity will also be discussed. The researchers want the readers to learn why the need for employee incentives arises. Second, the kinds of employee benefits will be thoroughly explained in this study. There are many different kinds of incentives given to employees to boost employee moral and motivation, which in turn results in better performance and higher productivity. The employee benefits given by the entity will help them keep their best employees, attract top new employees, gain employees loyalty, and create a more positive work environment. Third is the law that governs employee benefits. Sometimes, the employers just feel the need to give incentives while others need to be mandated for them to give benefits. Under the Philippine Constitution, there are laws that govern the implementation of employee benefits to ensure the welfare of the workers for they are at most need of attention in our economy. Fourth is the accounting treatment. As stated earlier, there are many different kinds of employee benefits and some of them differ in accounting treatment. It is important that the readers know how to determine employee benefits given to them. Likewise, the management should inform them the kinds of employee benefits that their worker is entitled to receive. The reader must be educated about the different kinds and types of employee benefits and their respective accounting treatment. Lastly, issues regarding employee benefits have increase in number nowadays. More and more employers get involve in data manipulation. In this study, we will lay down some important issues that reflect the state of employer-employee relationship. Of course, that is not always the case. However, it is important to be informed and these kinds of issues are not only for the employees but also for the management. The said topics will be the limitations of our study. Good benefits provide important resources that not only help a positive working relationship between employer and employee but also promote good

work habits and financial practices. Employee benefit is important for business owners to carefully consider their options. There are some industry in which business falls will help determine the type of basic employee benefits important to staff. There are different types or employee benefits like the postemployment benefit, short term benefit, other long-term employee benefit and termination benefit and in accounting for employee benefits use different approaches in determining the benefits that must be given to each employee. Here, we will discuss different employee benefit that basically given to all employees like health insurance, paid vacation, paid leave and retirement plans. Employee health insurance should be a process that considers all possible needs of the employee. Employee who work all day, without a break in sight, will generally be less productive on the job so employers offering basic employee benefits to allow their employees to earn paid vacation through years of service.. When we say paid leave, it allows sick employee to stay home and recover without jeopardizing their paychecks. A retirement plan allows employees to prepare for their future, securing their financial stability after they have aged out of the force. If a business doesnt offer any compensation other than salary, the business might find that staff members or employees are more loyal when the firm provides additional incentives. Many employees now value financial security. According to the towerswatson.com the most striking shift in attitudes toward retirement security, risk tolerance, and the value of retirement and health care benefits has been among younger employees at organization with a Defined Benefit plan so companies should consider their reward or specifically the benefit programs. Employers with existing Defined Benefit plans have a significant competitive advantage in attracting and retaining the employees and through this, employers can reduce human capital risks and increase the returns they accrue from their reward and talent management programs. As said earlier in the scope and limitations of this study, this research paper will be able to deal with the History, Kinds of Employee Benefits, Laws

related to the subject, Accounting Procedures use, and Issues arise in Employee Benefits. In the first chapter of the study, readers will be able to understand how the employee benefits came up in the history. It is truly relevant to know how employee benefits arise in the Accounting Standards. In this chapter, readers will be enriched by information about persons, institutions, or other group of people behind the foundation of these benefits given to employees. The next chapter is all about the Kinds and Types of Employee Benefits. In this portion, the readers will be able to know the classification of employee benefits. The readers will be able to understand the different kinds of employee benefits such as medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits. This study will also inform the readers about the characteristics and differences of employee benefits to each other. The third chapter will be dealing with the Laws related to Employee Benefits. Benefits given by the employers to their employees are guided by the legal requirements of the law. With this data, the readers will be able to know the basis of the employee benefits given by the employers through the law. The fourth chapter talks about the Accounting Procedures use in employee benefits. In this section, the readers will be able to know the development of accounting standards for employee benefits. It also notifies the readers how employee benefits are treated in the accounting field of the entities. International Accounting Standards (IAS) 19 will be revealed in this part, the standard that talks about the accounting treatment for employee benefits. It is also shown here how employee benefits are recognized and measured, and the disclosures needed in the financial statements. The last chapter is all about the issues about the said topic. In this study, information about the issues that arise in the accounting treatment for employee benefits will be disclosed to the readers. In this section, readers will be able to apprehend the issues that arise in the recognition of employee benefits cost because of the uncertainties in forecasting factors and information related to the benefit plans.