AICPA drafts guidance on accounting issues for insurers
The American Institute of CPAs’ Financial Reporting Executive Committee has proposed two working drafts of accounting issues for insurance entities to offer them guidance on implementing the Financial Accounting Standards Board’s new standards for long-duration insurance contracts and credit losses.
FASB’s new insurance accounting standard amends the existing recognition, measurement, presentation and disclosure requirements for long-term contracts, such as for life insurance, annuities and endowments. The Financial Reporting Executive Committee, also known as FinREC, and the AICPA Insurance Expert Panel have been developing working drafts on accounting implementation issues that have been identified for FASB’s new insurance standard, as FinREC also does for other industry sectors and accounting standards.
“The AICPA is committed to helping insurers with implementation of both the Long-Duration Targeted Improvements and Credit Loss standards” said Kim Kushmerick, the AICPA’s associate director of accounting standards, in a statement. “This is an extensive effort for the many volunteers involved with developing accounting issues that help insurers apply the new principles in both standards.”
The working draft for implementation of the insurance standard can be found here.
Another new FASB standard is for credit losses, also known as CECL for the Current Expected Credit Loss model it follows. The new standard promises to change how many companies, including financial institutions, account for their expected credit losses from impaired loans.
The AICPA is looking for feedback from preparers on the draft guidance; comments should be emailed to Kim.Kushmerick@aicpa-cima.com by Feb. 10, 2020. The finalized guidance will be included in a new AICPA Audit and Accounting Guide: Credit Losses, along with Audit and Accounting Guides for Life and Health Insurance Entities and Property and Liability Insurance Entities.