Credit Loss Standard Advisory Panel Plans to Review Implementation Questions
FASB plans to hold a meeting of its Transition Resource Group on June 12. The board has not released an agenda for the session, which will come near the first anniversary of the standard’s publication, but it will address some of the issues that have come to FASB in the past year about the amended guidance for writing down bad loans and securities. That guidance is scheduled to become effective in 2020 for public companies and 2021 for private companies. Representatives from the SEC’s Office of the Chief Accountant, the PCAOB, and bank regulators may attend the session.
Two Decades in the Making, Insurance Standard Emerges
The IASB plans to publish its long-awaited overhaul for insurance accounting by the end of May. Work on the standard dates back to 1997, when the IASB’s predecessor organization said that a consistent set of accounting guidance was needed for the complex products issued by insurers. The standard, which will require insurance companies to measure insurance contracts at current value, using updated assumptions about cash flows, discount rates, and risk to estimate future liabilities, is expected to usher in unprecedented changes for underwriters in many markets. “The biggest benefit of the standard is you won’t have locked in assets or liabilities,” said Michael Monahan, director of accounting policy for the American Council of Life Insurers. “It will be explainable volatility; that’s a good thing.” With all the changes taken together, insurers are bracing for abrupt swings in earnings when they adopt the new standard in 2021, although Monahan said the income statement changes will be manageable.
Auditing Standards Board Releases Exposure Draft for Benefit Plan Audits
The AICPA’s Auditing Standards Board (ASB) proposed a standard that addresses an auditor’s responsibility for audits of employee benefit plans. The proposal states that a benefit plan audit report should discuss the limits a plan’s executives or administrator may have imposed on the auditor and the assets excluded from an audit’s scope. The deadline to comment is August 21. If the ASB finalizes the amendments later this year or early in 2018, the board expects them become effective for financial statements for periods that end on or after December 15, 2018.
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