IMPROVING THE RECOGNITION AND MEASUREMENT OF EMPLOYEE COMPENSATION EXPENSES IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS

Abstract

The increasing complexity of modern remuneration systems has made employee compensation
accounting one of the most challenging areas of financial reporting. Although IAS 19 establishes clear principles
for the recognition and measurement of employee benefits, its practical application often varies due to subjective
professional judgments, inconsistent accounting policies, and the growing use of performance-based incentive
schemes. As a result, employee compensation expenses are not always recognized in the reporting period in
which the related economic benefits are consumed, thereby reducing the reliability of financial statements. This
study examines these practical issues and argues that improving the accounting for employee compensation
requires more than formal compliance with International Financial Reporting Standards (IFRS). It requires a
consistent approach that integrates the accrual basis of accounting, professional judgment, and digital payroll
information systems. Based on an analytical assessment of the requirements of IAS 19 and current accounting
practices, the paper proposes recommendations for improving the recognition and measurement of employee
compensation expenses. The study concludes that a more systematic application of IAS 19 can enhance the
quality of financial reporting, strengthen comparability, and provide management with more reliable information
for informed economic decision-making.