The Financial Accounting Standards Board (FASB) has decided to team with the International Accounting Standards Board (IASB) to try to develop a single accounting standard for insurance contracts.
FASB decided today at joint Web conference meeting with the IASB to continue with a joint project, "affirming the objective of developing standards of accounting for insurance contracts that would improve existing U.S. [Generally Accepted Accounting Principles (GAAP)] and converge with International Financial Reporting Standards [(IFRS)]," officials say. "The board will pursue those objectives by deliberating the issues in this project jointly with the IASB."
IASB now lacks specific standards for insurance contracts. It started working on standards in 2007, and it and FASB have been talking about the possibility of collaborating for about that long.
FASB added an insurance contracts project to its own agenda in October 2009, and FASB 
and IASB began discussing the insurance contracts project together in 2009, officials say.
IASB published an exposure draft in July 2010. Originally, IASB hoped to complete work on its new standard in June 2011.
FASB and IASB have now agreed to push the deadline back to December 2011, according to the Group of North American Insurance Enterprises (GNAIE), New York.
During the joint meeting, FASB staffers noted that the U.S. GAAP insurance standards are about two decades old, and that FASB likely would have to make significant changes in the "patchwork of guidance" that makes up the life GAAP standards even if it decided not to work with IASB.
"The IASB is going to go forward this year and issue a standard," said Marc Siegel, a forensic accounting specialist who serves on the board.
FASB should try to stay engaged with IASB and work on the new IFRS with IASB, Siegel said.
"I definitely would not want to cut off the conversation now," Siegel said.
FASB Chairman Leslie Seidman, a former accounting executive at
J.P. Morgan & Company Inc., New York, said FASB will need to work on issues such as presentation, measurements of cash flows and what cash flows to include in a financial statement even if it goes off to update GAAP insurance standards on its own.
It would be unfortunate if FASB ended up overhauling GAAP and producing insurance contract presentations that look drastically different from IFRS presentations, Seidman said.
"This is a global industry, and the U.S. industry is a major part of that market," Seidman said.
The GNAIE earlier had warned that IASB seemed to using a fast time table and failing to give adequate attention to concerns raised by commenters.
GNAIE Chair Jerry de St. Paer is now welcoming the FASB decision to work with IASB on a standards project.
The GNAIE also welcomes the FASB and IASB decision to push the completion deadline back until December, De St. Paer said.
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