The American Institute of CPAs Executive Financial Reporting Committee has released draft versions of its interpretations of the Financial Accounting Standards Board’s new long-term assurance accounting standard.
The standard, which the FASB published in 2018, makes specific improvements to its existing assurance standards for the recognition, measurement, presentation and reporting requirements for long-term contracts issued by a company. assurance. The AICPA FinREC Group and the AICPA Insurance Expert Group plan to continue to develop working drafts on the accounting implementation issues that have been identified for the new standard.
The four drafts published by the AICPA to help insurers implement the standard include:
1. Problem # 3: Market Risk Benefits – Scope
2. Issue # 4D: Market Risk Benefits – Retrospective Adoption of Guidelines on Market Risk Benefits and Their Effect on Purchase Accounting
3. Issue # 6: Using Discount Rates or Yield Curve for Increasing Interest on Insurance Liabilities under ASU 2018-12
4. Issue 16: Level of aggregation for measuring liability for future policy benefits
The AICPA plans to include the final versions of the project in its Audit and accounting guide: Life and health insurance entities.
In the meantime, the AICPA is seeking comments from financial statement preparers, practitioners and other interested parties. Comments should be emailed to [email protected] by July 29.
The FASB originally worked with the International Accounting Standards Board on a converged assurance accounting standard for US GAAP and International Financial Reporting Standards. US GAAP was seen to have more detailed standards for insurance accounting, but the two boards ultimately decided to go their separate ways. The FASB has chosen to modify its existing standards, mainly for long-term insurance contracts such as life insurance and annuities. Last year, in response to the COVID-19 pandemic, the board of directors decided to extend the effective date of the standard to 2023 for public companies and to 2025 for private companies (see the story).