A new federal government accounting standard issued Wednesday is designed to provide concise and meaningful information about insurance costs and liabilities.
The Federal Accounting Standards Advisory Board (FASAB) issued Statement of Federal Financial Accounting Standards (SFFAS) 51, Insurance Programs, establishing three categories of insurance and related guidance:
- Exchange transaction insurance programs other than life insurance.
- Nonexchange transaction insurance programs.
- Life insurance programs.
The new guidance rescinds existing standards for insurance and guarantee programs in SFFAS 5, Accounting for Liabilities of The Federal Government.
“The Board is seeking to improve federal financial reporting and to better inform readers about the operating performance of insurance programs and the extent of the risk of loss to the federal government from adverse events,” FASAB Chairman Scott Showalter said in a news release.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.