As the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) work to reconcile accounting standards, a group of insurance trade associations is expressing concerns that upcoming discussions of the insurance contracts will not address certain critical, yet controversial issues.
In a January 31 letter to the chairs of the two Boards, the associations said that a staff proposal prepared for the February 2 Joint IASB/FASB meeting effectively prohibits significant discussions of issues raised in the comment process following publication of IASB's Exposure Draft (ED) and the FASB's Discussion Paper (DP). Specifically, insurers are objecting to the way the proposed rules would have them classify, measure and report financial assets and liabilities, charging the update fails to simplify existing accounting standards for financial instruments and hedging activities, and does not provide useful information to investors in insurance companies.
"We were extremely surprised by both the timing and content of the staff paper given the widespread criticism the Boards received on the IASB proposal from investors, analysts, preparers and a variety of other stakeholders," the letter states. "The staff paper recommends that, despite strong opposition to the Board's proposals, certain critical elements of the proposals would be resolved without further discussion and not re-deliberated."
The trade associations say they believed, and the Boards had previously suggested, that a more complete discussion of issues would take place in mid-February, and the more controversial elements of the proposals would be re-deliberated.
"We recommend that the staff withdraw this paper and allow the previously planned re-deliberation process to evolve and address all of the significant issues identified by key constituents in both the comment letters and the public roundtables."
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