FYI Article – Get Ready. The Insurance Contracts Standard Is Coming!
Endorsement of IFRSs in Canada: More than Just a Rubber Stamp
After years of outreach and deliberations, the Insurance Contracts standard is expected to be issued by the International Accounting Standards Board (IASB) this year.
As a result, the Accounting Standards Board (AcSB) will complete its due process prior to the standard becoming Canadian GAAP.
While some might assume the process is simple because our policy is to incorporate International Financial Reporting Standards (IFRSs) as issued by the IASB into the CPA Canada Handbook – Accounting, there are many steps that are taken to ensure that the standard meets the needs of our stakeholders. In fact, we spend over 40 per cent of our time influencing and adopting IFRSs.
Our Due Process
These steps are designed to serve the public interest by:
- addressing the need for transparency of the standard-setting process;
- conducting consultations proportionate to the topic; and
- being responsive to input received and accountable to all stakeholders through research, discussion and consultation.
For each IFRS, we carry out and approve due process steps prior to issuing anything as Canadian GAAP. The steps undertaken on a given amendment or new standard varies based on a standard’s complexity and potential impact on Canadian stakeholders.
Check out the AcSB Staff Financial Reporting Commentary, which provides more information about newly issued IFRSs, early adoption and advance disclosure issues.
Insurance Contracts Project Due Process
So how did we apply our due process to the IASB’s Insurance Contracts project?
While this is not an exhaustive list, given the complexity of this topic, the activities are extensive:
- Canadian Exposure Drafts were issued in 2010 and 2013 in response to the IASB Exposure Drafts to seek input on whether the proposals are appropriate for application in Canada.
- Feedback received by Canadians, as well as feedback Canadian stakeholders provided directly to the IASB, was reviewed in detail to understand issues.
- Twenty meetings were conducted with the Insurance Accounting Task Force and other stakeholder committees.
- More than 40 roundtables and meetings were conducted with insurance industry stakeholders to discuss specific issues.
- Industry stakeholders made a presentation at an Accounting Standards Oversight Council meeting on the implications of the IASB’s proposals.
- Canadian insurance industry stakeholders presented their views in response to the IASB’s proposals at an AcSB meeting.
- The insurance contracts project was discussed at over 15 AcSB meetings.
- Three formal responses were submitted to the IASB by the AcSB relating to a 2007 discussion paper in 2007, and the 2010 and 2013 Exposure Drafts.
- Meetings were arranged between the IASB chair, IASB members and Canadian insurance industry stakeholders to discuss issues.
- Informal feedback was submitted to the IASB on specific issues.
The IASB is expecting to issue the final Insurance Contracts standard in 2017. Once the standard is issued, we will go through our formal due process to determine if it is appropriate for incorporation into the Handbook.
Katharine Christopoulos, CPA, CA
Principal, Accounting Standards Board
Phone: +1 (416) 204-3270