Impact of labor liabilities on the financial statements.

In Venezuela, both the public and private productive sectors have always been the engine of progress in developed countries; therefore, radical changes are generated in the social environment of a country, and particularly in the area of the legal framework, this has an impact on the economic environment, both at a macro and micro productive level, and more specifically and internally on labor liabilities.

Undoubtedly, we must emphasize that the right to work is constitutionally recognized in the Constitution of the Bolivarian Republic of Venezuela (CRBV) (1999), which states that everyone has the right to work and the duty to work according to their abilities and aptitudes, including people with disabilities, which also guarantees gender equality and equity and also establishes the responsibilities that the employer has with the workers in terms of health and social security. Likewise, it indicates that every person has the right to a sufficient salary that allows him/her to live with dignity and cover for him/herself and his/her family, basic, material, social and intellectual needs.

Since the creation of the Organic Law of Labor, Workers and Women Workers (LOTTT) (2012), published in Official Gazette No. 39.916, dated May 7, 2012, in Venezuela there have been many changes in the social and legal reality. Under this perspective, the LOTTT (2012) has created new scenarios, ratifying the role played by labor liabilities, in order to offer each of these workers a guarantee and calculation in accordance with the law; where the employer must comply with the provisions of this law. For this reason, the calculation of labor liabilities is based on the salary earned by the worker for the rendering of services and includes commissions, bonuses, gratuities, profit sharing or profits, additional salaries, vacation bonus, as well as surcharges for holidays, overtime or night bonus.

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Labor liabilities comprise the amounts of money that the company must pay to employees for rendering their services, such as: salary, profit sharing, social benefits, vacations. It is an implicit debt accrued by each worker in case he/she resigns or the company has to dismiss him/her or the company stops working at a certain moment. Labor liabilities are of great importance in all latitudes, contexts, societies and civilizations, although it is true that the Organic Law of Labor and Workers has served for the development as a mechanism for the solution of a great number of problems; modern society sees in it an indispensable tool for the continuous development of improvement and constant growth of the country, on behalf of all its workers.

Financial statements, also called financial reports, are reports used by institutions to disclose the economic and financial situation, as well as the changes experienced by the same at a given date or period. Most of these reports are the final product of accounting and are currently prepared according to the International Accounting Standards (IAS) (2009), whose main objective is to establish the basis for the presentation of general purpose financial statements, and ensure that they are comparable, both with the financial statements of the same entity for previous periods, as well as with those of other entities. Also, as established by the International Financial Reporting Standards for Small and Medium-Sized Enterprises (IFRS for SMEs) (2009), in its Section 28.3, an entity shall recognize the cost of all employee benefits to which employees are entitled as a result of services rendered to the entity during the reporting period.

Similarly, as indicated in the International Accounting Standard (IAS 19) (2010), the Standard requires an entity to recognize: (a) a liability when the employee has rendered services in exchange for which the right to receive payments in the future is created; and (b) an expense when the entity has consumed the economic benefit from the service rendered by the employee in exchange for the benefits in question. This is why labor liabilities are of great help to the financial statements, because they allow you to evaluate the organization and know the debts it has with its workers for these concepts: Salary, Utilities, Benefits.

Benefits, Vacations. These can be onerous for the company at the time when the payment obligation arises, for this reason it is convenient to estimate them in order to determine their impact and their relative importance in the financial statements. These allow measuring the profitability and financial capacity of the company, to know its economic situation, and to determine how the commitments acquired in labor matters will affect it, so that timely forecasts on labor liabilities can be made.