AICPA proposes guidance on insurance accounting
The American Institute of CPAs’s Financial Reporting Committee released working drafts Monday of two pieces of implementation guidance for the Financial Accounting Standards Board’s long-duration insurance contracts standard.
The AICPA’s FinREC group has been developing guidance to help companies in various industries deal with some of FASB’s new standards such as revenue recognition. In 2018, FASB came out with an accounting standards update, ASU 2018-12, providing some targeted improvements to the accounting for long-term insurance contracts, such as for life insurance.
The working drafts for implementation of ASU 2018-12 are:
- Issue #9D: Deferred acquisition costs - Considerations for determining the expected term of the contract
- Issue #11D: Upon adoption of FASB ASU 2018-12, is it permissible for an entity to change its accounting policy for all products for including the cost of reinsurance in loss recognition testing?
The AICPA is looking for feedback on the proposed guidance. Please submit informal feedback to Kim.Kushmerick@aicpa-cima.com by May 15, 2020.
FinREC and the AICPA Insurance Expert Panel plan to continue to develop working drafts on accounting implementation issues that have been identified for the new insurance standard.
When all of the guidance is finalized, it will be included in the Audit and Accounting Guide: Life and Health Insurance Entities.