The Financial Accounting Standards Board is asking for suggestions about how it should go about creating new accounting rules for insurance contracts.
If FASB, Norwalk, Conn., decides to work on an insurance policy accounting project, either alone or with the International Accounting Standards Board, London, “its objective would be to develop a common, high-quality standard that would address recognition, measurement, presentation and disclosure requirements for insurance contacts,” FASB officials say.
“The project would provide accounting and reporting guidance for both the issuer and the holder of an insurance contract,” officials say.
FASB wants to hear from makers and users of financial reports to find out whether they think there is a need for the project and whether they think FASB should handle the project alone or with the IASB, officials say.
Topics addressed in the FASB invitation to comment include the idea of using cash flow accounting for both short-duration and long-duration contracts, rather than the unearned premium method for short-duration contracts, and the lock-in method for long-duration contracts.
The invitation also refers to accounting for the time value of money and efforts to “unbundle” or “bifurcate” the insurance components of insurance contracts from the financing components.
Comments on the proposed project are due Nov. 16.
Information about submitting comments is available on the Web at