IASB News
Investors Advise Insurers to Quicken Adoption of New Insurance Accounting Rules
Insurance companies need to get on with implementing the IASB’s new accounting rules for insurance contracts, according to remarks by an IASB member. Investors have reported that because they have been unable to analyze the insurance sector on a fundamental basis, some generalists have decided not to invest in it at all, IASB member Nick Anderson said on November 21 during an IFRS Foundation podcast about the rules. “There are different costs [but] there’s a cost to the economy and to the community by not having this level playing field,” said Anderson. “I think again it reflects the view by not going to invest in the sector, that’s a cost in capital impact,” he said. In May 2017, the IASB issued International Financial Reporting Standard (IFRS) 17, Insurance Contracts, which introduces fundamental changes that involves significant operational costs, including system development costs. In June, the board issued an exposure document to make targeted amendments to IFRS 17, including to defer the mandatory effective date by one year for annual periods beginning on or after January 1, 2022. IASB member Darrel Scott, in the November 21 podcast, said the feedback the board received overall has provided it with a solid foundation to move ahead what it proposed. “We’re aware that people are in the process of doing implementation, the work is ongoing as we sit in our meetings and speak,” said Scott. “That means the sooner we can give certainty about the process forward, the more useful it’s going to be for those implementation processes.”
FASB News
Rules for Booking Cloud Implementation Costs Could Pose Challenges
Companies focused on adopting leases, credit loss and other major accounting standards also need to remember the new cloud computing implementation rules that take effect in weeks, because those provisions could prove tricky, according to a statement from Deloitte. The guidance requires companies to determine whether to defer or capitalize implementation costs incurred in a cloud computing arrangement that is a service contract. “There are a few things that makes this a little more challenging—one is that there are various stages of an implementation in a cloud arrangement, and some of those stages will meet these capitalization criteria and others would be expensed,” Sean Torr, Deloitte’s Risk and Financial Advisory managing director, said. “So, look into the details of where those aspects lie,” he said. The new rules align the framework for deferring implementation costs associated with a cloud computing arrangement with what companies have been applying for on-premise implementation. “There’s been so much focus on revenue, leasing, and CECL [current expected credit losses] that this might not be something that companies are focused on,” Chris Chiriatti, managing director at Deloitte & Touche LLP, said. “But any company that’s actively deploying into the cloud or thinking about moving to the cloud needs to understand what the new accounting rules require them to do with regard to cost deferral for their implementation,” he said.
FASB Names Six New Members to its Nonprofit Advisory Panel.
FASB announced it has appointed six new members to its Not-for-Profit Advisory Committee (NAC), the body that provides input on financial reporting matters affecting nonprofit organizations. These new members will take up their seats January 1, 2020, replacing six whose terms expire at year-end. The incoming NAC members will “add significantly to the richness and diversity of perspectives that have characterized the NAC since its inception in 2010,” FASB Chairman Russell Golden said in a statement. “We look forward to welcoming them to their new roles.”
The incoming members are:
- Jennifer Deger, director of finance and global controller, the Bill & Melinda Gates Foundation;
- Dennis Gephardt, vice president–senior credit officer, Moody’s Investors Service;
- Melisa Galasso, owner, Galasso Learning Solutions, and director, Cherry Bekaert LLP;
- Andrea Wright, partner and not-for-profit practice lead, Johnson Lambert LLP;
- Kevin Carey, chief financial officer, Young Adult Institute Inc. (YAI);
- Barbara Potts, system vice president–finance, SSM Health.
They will replace six members whose terms expire on December 31, 2019: Alice Antonelli, Cathy Clarke, Jim Croft, Michael Forster, Andrew Prather, and Amy Robinson. “We deeply appreciate the expert insights they each brought to NAC discussions about topics of importance to the not-for-profit sector,” Golden said.
