FASB diverges from the insurance project

  • FASB (US Financial Accounting Standards Board) (lt blue) Image

20 Feb, 2014

At its meeting yesterday, the Financial Accounting Standards Board (FASB) tentatively decided to abandon its convergence efforts with the International Accounting Standards Board (IASB) on insurance contracts.

The FASB tentatively decided to focus its future efforts on making targeted improvements to the existing U.S. GAAP insurance accounting model instead. Factors the Board considered in this decision included constituent feedback, implementation costs, and the likelihood that the FASB and IASB would be unable to agree on a converged accounting model. For short-duration contracts, the FASB tentatively decided that its targeted improvements should focus only on disclosure requirements; for long-duration contracts, the targeted improvements will take into account the requirements for recognition, measurement, and disclosure.

This decision would result in a U.S. insurance accounting model that would diverge significantly from the insurance accounting model proposed by the IASB. Several FASB members indicated that its targeted improvement efforts could possibly result in a long-duration accounting model similar to the building block approach being pursued by the IASB; however, such an outcome is not the primary objective of such improvements.

A recording of the session and minutes from the meeting reached during the meeting are available on the FASB website.

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