Responses to IASB Documents for Comment
New IFRS under Development – Insurance Contracts
Exposure Draft – Insurance Contracts – June 2013
On November 1, 2013, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft issued in June 2013. The letter agrees with the fundamental principles in the proposed standard. The letter also sets out recommendations to amend some aspects of the proposed standard to result in financial reporting that would represent the economics of insurance contracts faithfully. In addition, the letter suggests ways of making the standard operational and enhancing the quality of its implementation on a global basis. The letter stresses the importance of the IASB and FASB renewing their efforts to work together in order to achieve a high-quality standard. Read the AcSB letter posted by the IASB.
Exposure Draft – Insurance Contracts – July 2010
On November 30, 2010, the AcSB submitted a comment letter responding to the IASB’s Exposure Draft. The letter strongly recommends that the IASB and FASB give the highest priority to taking the time to deliberate constituents’ comments fully, resolving the differences between their approaches, and developing a common and high-quality standard. The letter fundamentally agrees with the IASB’s proposal to use the building block approach for determining a current measurement of insurance contracts, except for one aspect of the “time value of money” building block. To assist the IASB in developing a revised discount rate requirement, the letter includes the following alternative proposal for a two-step approach for reporting the interest cost on insurance liabilities. In profit or loss, an insurer would report the effect of discounting insurance liabilities using the long-term rate the insurer expects to earn on its investments. In other comprehensive income, an insurer would report the change in the difference between discounting the liability using the current market observable rate (i.e., a high-quality corporate rate) and the long-term expected rate of return on investments. The AcSB letter posted by the IASB is available here.