Skip to main content

IASB proposes improvements to insurance accounting

The International Accounting Standards Board (IASB) today published for public comment an exposure draft of improvements to the accounting for insurance contracts. The exposure draft proposes a single International Financial Reporting Standard (IFRS) that all insurers, in all jurisdictions, could apply to all contract types on a consistent basis.

When the IASB was established in 2001 there were no international financial reporting requirements for insurance contracts. In 2004 the IASB introduced IFRS 4 Insurance Contracts as an interim standard that permitted many existing international accounting practices to be retained, whilst beginning a more comprehensive review of insurance accounting as a second phase of the project. The proposals published today are the result of that review.

The IASB launched its public consultation when it published a discussion paper, Preliminary Views on Insurance Contracts, in 2007. In developing the proposals released today, the IASB considered more than 160 comment letters received on the discussion paper, as well as feedback from interested parties through an extensive outreach programme, including interaction with the IASB’s Insurance Working Group and a targeted field test with preparers. The IASB will undertake further outreach during the exposure draft’s comment period, including a second round of field tests, to ensure that the IASB considers the views of all interested parties before it issues an IFRS.

Commenting on the exposure draft, Sir David Tweedie, chairman of the IASB, said:

A fundamental review of insurance accounting was long overdue, with current practice resulting in financial information that is impenetrable to all but the most expert of users.

The publication of this exposure draft marks an important milestone in this review process. The proposed standard better reflects the economics of insurance contracts, and would result in more relevant, understandable and comparable information being available to investors.

The exposure draft Insurance Contracts is open for comment until 30 November 2010 and can be accessed via the ‘Comment on a Proposal’ section of www.ifrs.org

To find out more, visit the Insurance Contracts section of the IASB website viahttp://go.ifrs.org/insurance_contracts. Materials available on the website include a podcast introduction to the proposals by Warren McGregor, member of the IASB, as well as a high level executive summary of the proposals (Snapshot).

An interactive webcast introducing the proposed standard will be held at 10.00am London time on Friday 6 August, and repeated at 3.00pm London time on the same day for the benefit of interested parties in different time zones.

To register, go to: http://www.ifrs.org/Meetings/Live+webcast+Insurance+accounting.htm

Comments

Post a Comment

Popular posts from this blog

Maintenance Charges Default: No Water, No Sympathy

In what can only be described as a case of forum shopping (trying to find the friendliest court), an apartment owner in Shiv Vihar CHS, Dombivali (East), took his complaints on a legal tour. The petitioner, Vilas Gopal Dongare member of the society was unhappy. Why? Because his water supply was cut off. The reason? He had not paid his maintenance bills, which had piled up to a whopping Rs. 7 Lakhs! Despite making several complaints about the alleged harassment by the society and even a water tank causing structural issues in his building, his cries were heard and promptly dismissed. The Maharashtra State Human Rights Commission looked into his case and, on 05.02.2020, decided it was not a human rights violation. They said, “Pay your bills first.” The society initiated proceedings under Section 101 of the Maharashtra Co-operative Societies Act, 1960 (MCS Act) to recover arrears and got a Recovery Certificate issued in its favour. When the petitioner’s appeal against this certificate wa...
Post a Comment
Read more

AMORTISED COST CALCULATION: THE EFFECTIVE INTEREST RATE (EIR)

IAS 39 mandates some financial assets and liabilities to be subsequently measured at ‘amortized cost’.  This measurement concept is a management theory put in accounting practice. It means that the contractual interest rate each period should be adjusted to amortize the transaction costs over the expected life of the financial instrument. The amortization is calculated on an effective interest rate (EIR) / yield-to-maturity (YTM) basis. The EIR is the rate that exactly discounts the stream of principal and interest cash flows excluding any impact of credit losses, to the initial net proceeds. It is important to note that EIR method does not take into account any future credit impairments anticipated on that instrument. The carrying amount of the financial instrument subsequently measured at amortized cost is computed as: Transaction costs are an integral part of the amortized cost calculation. They are defined as costs that are directly attributable to the acquisit...
49 comments
Read more

Court Upholds Co-operative Membership Transfer with Release Deed

In the case of Bima Nagar Co-operative Housing Society Ltd. v. Divisional Joint Registrar & Ors. WP 10768 of 2024 , the Bombay High Court on 23.09.2024 dismissed the society’s petition challenging the membership transfer to Pushpa Morey, a widow, following her husband's death. Initially, Pushpa was granted provisional membership but was later denied full membership by the society. Pushpa applied for full membership after her husband's passing. When the society refused, she sought help from the Deputy Registrar, who ordered that the society admit her as a full member under Section 22(2) of the Maharashtra Co-operative Societies Act, 1960. The society’s appeal to the Divisional Joint Registrar was unsuccessful, prompting the writ petition in the Bombay High Court. The society argued that the "family arrangement" concept under Section 154B-13 of the Maharashtra Co-operative Societies Act applies only to a Hindu Undivided Family (HUF). Pushpa, however, contended tha...
2 comments
Read more