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

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

VIDEO

How to Excel pivot a general ledger

The general ledger is a vast historical data archive of your company's financial activities, including revenue, expenses, adjustments, and account balances. J. Carlton Collins, CPA, shows how to prepare data for, and mine data with, PivotTables.

QUIZ

News quiz: Taking an economic snapshot and looking to the future

Recent news included IRS actions that affect individuals and partnerships and a possibly influential move by a Big Four accounting firm.Take this short quiz to see how much you know about the news.