The Board considers stakeholder feedback on the proposed definition of social benefits

What is social benefits?

ED 205 on Social Benefits proposed that social benefits are defined as cash transfers and in-kind benefits provided to:

• specific individuals and/or households who meet eligibility criteria;
• mitigate the effect of social risks; and
• address the needs of society as a whole.

Social risks are events or circumstances that:

• relate directly to the characteristics of individuals and/or households, for example, age, health, poverty and employment status; and
• may adversely affect the welfare of individuals and/or households, either by imposing additional demands on their resources or by reducing their income.

These definitions are substantially aligned with IPSAS 42 on Social Benefits and draws on concepts used in the Government Finance Statistics Manual.

Only cash social benefits are in the scope of ED 205. Entities should consider GRAP 19 on Provisions, Contingent Liabilities and Contingent Assets to account for in-kind social benefits.

What did respondents say?

Respondents to ED 205 raised concerns about the complexities of the definitions. They noted it may be difficult to assess when a benefit meets the definition of social benefits, and to distinguish social benefits from other benefits that are provided to mitigate the effect of risks other than social risks. Common examples provided included emergency relief and other in-kind benefits.

What did the Board decide?

The Board considered whether the definitions could be clarified and whether any changes could be made to reduce the complexities. After exploring different options, the Board concluded that any amendments to the definitions are unlikely to resolve the issues. The definitions will remain complex to interpret and apply.

To prevent entities from undertaking a complex assessment for in-kind benefits, the Standard will be clear upfront that only cash benefits are in the scope of the Standard. To resolve the issues with the complexities, other forms of guidance and initiatives will be considered. These will focus on assisting entities with understanding the definitions and the benefits that would be in the scope of the Standard. For example, implementation guidance and establishing a reference group. These initiatives are expected to be more impactful than amending the definitions.

What is next?

The Board will undertake a full review of the responses to ED 205 at the December 2024 meeting, and approve the Standard of GRAP on Social Benefits. The next phase is the development of an exposure draft on the transitional provisions and proposed effective date.

Disclaimer

The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.