Following the 2010 exposure draft (ED), the IASB has published a targeted revised ED that will fundamentally change the accounting by all entities that issue insurance contracts. The IASB has attempted to address concerns expressed by stakeholders regarding perceived ‘artificial’ volatility resulting from the proposals in the previous ED. The revised ED will replace IFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. While this is not a joint project, the IASB and FASB have been working together in their deliberations. However, the EDs will have a number of differences.
The revised ED will significantly affect all entities that issue insurance contracts, including recognition of profits and presentation in the statement of comprehensive income. But the new proposals add significant complexity and create extra demands on resources, data and modelling systems, and stakeholders need to understand the changes.
Read our latest Straight Away to learn how these changes may impact your business.