IASB to issue “targeted re-exposure” of insurance proposals

BY KEN TYSIAC

The International Accounting Standards Board (IASB) decided this week to re-expose its proposals for insurance contracts accounting.

Although the project, which has been undertaken jointly with FASB, has been in progress since 2007, the IASB decided that re-exposure for public comment is appropriate because substantial changes—whose effects need to be understood—have been made since the original ED was released for comment in 2012.

What is being called a “targeted re-exposure” by the board seeks answers to a limited number of questions. The board is limiting the questions to avoid reopening issues that have been decided to its satisfaction.

“We are very aware of the difficulties faced by insurance companies and pension funds in the current low-interest environment,” IASB Chairman Hans Hoogervorst said in a statement. “As such, we realize the importance of establishing a workable standard based on current measurement as soon as possible. However, it is of equal importance that we get this standard right.”

Questions in the ED will relate to proposed requirements for:

  • Treatment of participating contracts.
  • Presentation of premiums in the statement of comprehensive income.
  • Treatment of the unearned profit in an insurance contract.
  • Presenting, in other comprehensive income, the effect of changes in the discount rate used to measure the insurance contract liability.
  • The approach to transition.


The ED will be made available on the IASB’s website.

FASB will continue its deliberations on insurance contracts on Wednesday with a one-hour discussion of the measurement of the consideration allocated to the investment component and excluded from the statement of comprehensive income.

Although FASB and the IASB have worked jointly on the project, they have reached different conclusions about several elements of the model. FASB has not yet issued an ED on insurance, but its current technical plan projects release of an ED in the fourth quarter.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Time to prepare for overtime changes

As an employer, trusted business adviser, or HR professional, you will need to be aware of exemption guidance, record requirements, advice for clients, and typical problems in applying overtime pay.

QUIZ

News quiz: Good news on pay and benefits for accountants

CPAs can find much to like in recent reports, including news that their expertise and skills are in such demand that pay is expected to rise and that their employers value professional certifications.

CHECKLIST

Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.