Accurate actuarial valuation of compensated absences — earned leave, sick leave, and long-term leave liabilities — compliant with Ind AS 19, IAS 19, and AS 15(R).
Leave encashment — also known as compensated absences — is the liability arising from an employee's entitlement to carry forward and encash accumulated leave balances. Under Indian accounting standards, this constitutes a significant long-term employee benefit that must be valued actuarially.
Under Ind AS 19 and IAS 19, non-vesting short-term leave (e.g., annual sick leave) is treated on an accrual basis, while long-term vesting leave (earned leave that accumulates and can be encashed) requires a full actuarial valuation using the Projected Unit Credit Method (PUCM).
Under AS 15(R), companies must separately disclose the present value of leave encashment obligations alongside gratuity. Most companies handle both valuations in a single engagement with CGC to reduce cost and effort.
We collect leave balances, opening and closing figures, encashment history, and maximum accrual limits from your HR or payroll records.
Using the Projected Unit Credit Method, we model future leave encashment payouts with assumptions on salary growth, discount rate, attrition, and mortality.
A certified actuarial report is delivered covering all required disclosures — DBO, service cost, interest cost, actuarial gains/losses, and OCI.
Most clients opt for a combined gratuity + leave encashment report — saving time, reducing duplication, and cutting costs.
Reports prepared under Ind AS 19, IAS 19, AS 15(R) and US GAAP simultaneously for groups with mixed reporting requirements.
We liaise directly with your statutory auditors — Big 4 or otherwise — explaining our methodology and assumptions to ensure smooth sign-off.
Many organisations underestimate their leave encashment liability because it appears routine and manageable in normal operations. However, during restructuring, mass retirement, or unexpected attrition events, the actual cash outflow can be substantially higher than provisioned.
An accurate actuarial valuation ensures your balance sheet correctly reflects the economic reality of this obligation — protecting you from audit surprises and giving management a reliable view of long-term employee costs.
Get a certified actuarial leave encashment report, often combined with gratuity for maximum efficiency.