Valuation Of Interest Rate

It is required under the Accounting Standard for Employee Benefits to conduct an actuarial valuation of Interest Rate Guarantee for Exempt Provident Funds as these funds are managed independently by the company and are not part of the widely popular governmental scheme. Interest rate shortfall arises if the rate declared for Employees 'Provident Fund by the Government under paragraph 60 of the Employees' Provident Fund Scheme, 1952 exceeds the rate of return earned on the investments. According to the standard an additional provision for the interest shortfall is required by the employer. Hence the need arises to value and report the interest rate guarantee as part of the obligations set by the company.