IASB’s revisions to insurance contract standard exposed for comments

BY SABINE VOLLMER

The International Accounting Standards Board on Thursday published a revised exposure draft of proposals meant to improve the accounting for insurance contracts.

The draft released Thursday builds on proposals published in 2010. The revisions address issues raised during a public comment period and introduce enhancements to the presentation and measurement of insurance contracts while seeking to minimize artificial accounting volatility.

The IASB has been working on the standard in an effort to bring more consistency to accounting for insurance contracts and to help investors understand how insurance contracts affect an entity’s financial position, financial performance, and cash flows.

“We are approaching the end of this important project to bring consistency and transparency to the accounting for insurance contracts,” IASB Chairman Hans Hoogervorst said in a statement. “The document published today responds to concerns expressed about noneconomic volatility resulting from our previous proposals.”

The IASB began establishing the insurance contracts standard in 2001 and introduced an interim standard in 2005, when the European Union and others adopted IFRS. In 2007, the IASB published a discussion paper, followed by the initial proposals in 2010.

Following the comment period for the revised proposals, the IASB expects to have all the information necessary to publish a final standard. Comments on the revisions may be submitted until Oct. 25.

The IASB expects to allow a period of about three years before the final standard takes effect, which would allow companies to prepare for implementation.

Sabine Vollmer ( svollmer@aicpa.org ) is a JofA senior editor.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.

SPONSORED REPORT

Getting leases in line

ASC Topic 842 is a relatively simple standard that can mean profound changes for organizations with leases. This report examines what makes this standard challenging and describes new ways for CPAs to add value.