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Reimbursement of expenses from

standpoint of Financial Reporting

Introduction

1. Reimbursement means the action of repaying a person who has
spent or lost money. Reimbursement is very frequent in the business
world. Parent company reimburses to its subsidiaries the amount of
expenses incurred on behalf of it, a company reimburses personal
expenses of its employees in order to retain them, insurance companies
reimburses the losses incurred to insured persons, etc. There are so
much examples of reimbursements.

There is no direct guidance on financial reporting of reimbursements.
The guidance can be taken from other standards, like for reimbursement rAMAKANT MIShrA
to employees guidance can be taken from Ind AS 19 or AS 15; for CA
reimbursement from government guidance can be taken from Ind
AS 20 or AS 12, for reimbursement between holding and subsidiary
company guidance can be taken from Ind AS 27, Ind AS 110 and
AS 21.

There can be two ways of reimbursements:
A. Reimbursement of personal expenses or loss of a person or
entity; and
B. Reimbursement of expenses incurred by a person or an entity
on behalf of any other person or entity.
The financial reporting of reimbursement depends mainly on the
above two ways.
Reimbursement to employees

2. To retain employees companies reimburse their personal expenses.
Such type of reimbursements are covered under Ind AS 19 and AS 15.
According to Ind AS 19, Employee Benefits and AS 15, Employee
Benefits, employee benefits are forms of considerations given by an
entity in exchange for service rendered by employees or for the
termination of their employment. The employee benefits can be

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