By Denise Lugo
NORWALK, Conn.--Members of the Financial Accounting Standards Board voted May 23 to issue an exposure document revising the way companies would account for insurance contracts in the United States, admitting, however, that it would incur costs, complexity, and nonconvergence with the International Accounting Standards Board.
The costs and complexity incurred by the accounting provisions would be outweighed by the benefits of the proposed accounting requirements, most board members said. Two members said the lack of convergence with IASB lessens the appeal of the standard when considering such costs.
The proposal would replace existing product-specific guidance under U.S. generally accepted accounting principles (GAAP) with two models for measuring insurance contracts namely:
Under current GAAP, multiple accounting models exist depending on the nature of the insurance contract. The new models would focus on representing the fundamental differences in the types of contracts that would apply, board discussions indicated.
Another viewpoint raised is that the proposed provisions would provide financial statement users with current information about an entity's obligation for its issued insurance contracts and reinsurance protection that it has purchased, in a more relevant and transparent manner than under existing GAAP.
Text of the board's handout on this discussion is at http://www.fasb.org/cs/ContentServer?c=Document_C&pagename=FASB%2FDocument_C%2FDocumentPage&cid=1176162653340.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)