Our Termination of Benefits Liability Policy serves as a critical guide for enterprises navigating the complex process of terminating employee benefits and managing exit costs. The policy outlines the stringent criteria for recognizing liabilities associated with involuntary and voluntary termination benefits, ensuring that organizations can accurately account for these expenses in their financial statements.

The policy mandates that management must approve and commit to a detailed termination plan before recognizing any related liability. This plan should specify affected employees, job classifications, functions and locations and confirm that no significant changes are anticipated during implementation.

Sample procedures include:

• Prior to the date of the financial statements, the appropriate level of management must approve and commit the enterprise to the plan of termination.
• Prior to the date of the financial statements, the benefit arrangement must be communicated to the employees in sufficient detail to enable the employees to determine the type and amount of benefits that they will receive if they are terminated.
• The plan must specifically identify the number of employees to be terminated, their names, job classifications or functions, and their locations.
• The plan must indicate that no significant changes to the plan are likely during the time to complete the plan.