This document provides an overview of the IASB and FASB joint insurance project to develop an international accounting standard for insurance contracts. It summarizes the phases of the project, key requirements of the interim standard IFRS 4, and highlights of the accounting and disclosure requirements for insurance contracts under IFRS 4.
This document provides an overview of IFRS 4 Insurance Contracts. It discusses key aspects of IFRS 4 including the scope, definition of insurance contracts, income recognition, concessions provided, acquisition of insurance entities, deferred acquisition costs, liability adequacy tests, loss reserving, and disclosures. It also provides an overview of the upcoming Phase II changes which will move accounting for insurance contracts towards a fair value approach. Case studies and references are included for additional information.
IFRS 4 Insurance Contracts provides guidance on accounting for insurance contracts. It applies to all insurance contracts an entity issues and reinsurance contracts it holds, except for related assets and liabilities covered by other standards. An insurance contract requires the insurer to accept significant risk from the policyholder. IFRS 4 allows certain practices temporarily but will be replaced by IFRS 17 in 2021. It sets out disclosure requirements regarding risks, accounting policies, reinsurance, and assumptions used.
This document provides an overview of the content covered by IAS 37 relating to provisions, contingent liabilities, and contingent assets. It discusses key topics such as the definition of provisions and their recognition criteria, measurement of provisions including discounting, changes in provisions, and specific types of provisions for onerous contracts and restructuring. Contingent liabilities and contingent assets are also defined along with their accounting treatment and disclosure requirements.
This document provides an overview of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It defines key terms including provisions, present obligations, past events, and probable outflows. It discusses the recognition and measurement of provisions, contingent liabilities, and contingent assets. Examples are provided for applying the standard to issues like warranties, legal claims, and restructuring plans. The document concludes with exercises assessing various scenarios in light of IAS 37 requirements.
This document outlines the requirements and guidance for a first-time adopter of International Financial Reporting Standards (IFRS) as provided in IFRS 1. It discusses the objective, scope, definitions, recognition and measurement principles, mandatory exceptions and optional exemptions to retrospective application that a first-time adopter must consider. It also provides examples of the phased transition approach to IFRS adoption in Ethiopia, including transition dates and timelines for different entities.
IFRS 15 Revenue from contracts with customers Nadir Malik
IFRS 15 Revenue from contracts with customers
Overview of new Standard
Back ground of revenue recognition standard
5 step Model
Contract Cost
Specific guidance
Transition
Presentation and Disclosure
Impacts, challenges and issues
Q&A discussion
This document presents an introduction to a presentation on IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors. It lists the names and IDs of the presentation team members and provides an overview of the objectives and requirements of IAS 8. It discusses accounting policies, changes in estimates, and errors, including examples. It also includes sample financial statement extracts and solutions to demonstrate the accounting treatment for changes in policies, estimates, and corrections of prior period errors.
This document provides an overview of IFRS 4 Insurance Contracts. It discusses key aspects of IFRS 4 including the scope, definition of insurance contracts, income recognition, concessions provided, acquisition of insurance entities, deferred acquisition costs, liability adequacy tests, loss reserving, and disclosures. It also provides an overview of the upcoming Phase II changes which will move accounting for insurance contracts towards a fair value approach. Case studies and references are included for additional information.
IFRS 4 Insurance Contracts provides guidance on accounting for insurance contracts. It applies to all insurance contracts an entity issues and reinsurance contracts it holds, except for related assets and liabilities covered by other standards. An insurance contract requires the insurer to accept significant risk from the policyholder. IFRS 4 allows certain practices temporarily but will be replaced by IFRS 17 in 2021. It sets out disclosure requirements regarding risks, accounting policies, reinsurance, and assumptions used.
This document provides an overview of the content covered by IAS 37 relating to provisions, contingent liabilities, and contingent assets. It discusses key topics such as the definition of provisions and their recognition criteria, measurement of provisions including discounting, changes in provisions, and specific types of provisions for onerous contracts and restructuring. Contingent liabilities and contingent assets are also defined along with their accounting treatment and disclosure requirements.
This document provides an overview of IAS 37 Provisions, Contingent Liabilities and Contingent Assets. It defines key terms including provisions, present obligations, past events, and probable outflows. It discusses the recognition and measurement of provisions, contingent liabilities, and contingent assets. Examples are provided for applying the standard to issues like warranties, legal claims, and restructuring plans. The document concludes with exercises assessing various scenarios in light of IAS 37 requirements.
This document outlines the requirements and guidance for a first-time adopter of International Financial Reporting Standards (IFRS) as provided in IFRS 1. It discusses the objective, scope, definitions, recognition and measurement principles, mandatory exceptions and optional exemptions to retrospective application that a first-time adopter must consider. It also provides examples of the phased transition approach to IFRS adoption in Ethiopia, including transition dates and timelines for different entities.
IFRS 15 Revenue from contracts with customers Nadir Malik
IFRS 15 Revenue from contracts with customers
Overview of new Standard
Back ground of revenue recognition standard
5 step Model
Contract Cost
Specific guidance
Transition
Presentation and Disclosure
Impacts, challenges and issues
Q&A discussion
This document presents an introduction to a presentation on IAS 8 Accounting Policies, Changes in Accounting Estimates, and Errors. It lists the names and IDs of the presentation team members and provides an overview of the objectives and requirements of IAS 8. It discusses accounting policies, changes in estimates, and errors, including examples. It also includes sample financial statement extracts and solutions to demonstrate the accounting treatment for changes in policies, estimates, and corrections of prior period errors.
The effective date for IFRS 17 is now 2021. The new effective date will mean companies could start planning for the change in 2018 as part of being ready for the new standard by 2021.
The presentation is an effort towards better understanding of the IAS-37, through the use of proper headings, bullets, key points and graphics where needed.
This document provides an overview of IFRS 11 - Joint Arrangements and Associates. It defines joint arrangements as arrangements where two or more parties have joint control based on a contractual agreement. Joint arrangements are classified as either a joint operation or a joint venture depending on the parties' rights and obligations. For a joint operation, parties account for their share of assets, liabilities, revenue and expenses. For a joint venture, parties account for their interest as an investment using the equity method. Examples of each type of arrangement are also provided.
The document provides an overview of International Accounting Standards (IAS) 37, 17, and 19 regarding accounting for liabilities.
IAS 37 covers provisions, contingent liabilities, and contingent assets. It requires provisions to be measured at management's best estimate of the amount required to settle the obligation. IAS 17 distinguishes between finance and operating leases, with different accounting treatments. Finance leases require recognition of an asset and liability, while operating leases do not. IAS 19 addresses accounting for short-term employee benefits, post-employment benefits, other long-term benefits, and termination benefits. Short-term benefits are expensed as incurred without discounting, while other categories require recognition of liabilities.
International Accounting Standard 8 establishes requirements for selecting accounting policies, accounting for changes to accounting policies, changes in accounting estimates, and correcting errors in previously issued financial statements. The standard aims to enhance the relevance and reliability of financial statements and their comparability over time and across entities. It requires retrospective application for changes in accounting policies, retrospective restatement to correct errors in prior periods, and prospective application for changes in accounting estimates. Extensive disclosures are also required.
The document provides an overview of IFRS 16 Leases by Fred Nieto, Head of Investor Engagement at the IASB. It discusses key facts about IFRS 16 including the sectors most affected, the effective date of 2019, and accounting changes for lessees and lessors. The presentation then covers the essentials of IFRS 16 including the definition of a lease, recognition of right-of-use assets and lease liabilities, income statement impact, and intended benefits of improved comparability. Finally, it discusses new disclosure requirements and how restatement under the new standard will work.
IFRS 4: Insurance Contract & IAS 24: Related Party DisclosureM.K.Jahid Shuvo
The document discusses IFRS 4 on insurance contracts and IAS 24 on related party disclosures. IFRS 4 provides an interim standard for insurance accounting until a final standard is developed. IAS 24 requires disclosure of relationships and transactions between related parties, which include entities that control or significantly influence other entities. Key details to disclose for related parties include transaction types and volumes, pricing policies, and outstanding balances.
This document defines key terms related to revenue recognition under IFRS 15, including revenue, contracts, contract assets and liabilities. It then summarizes the 5-step model for recognizing revenue: 1) identify the contract, 2) identify separate performance obligations, 3) determine transaction price, 4) allocate price to obligations, 5) recognize revenue when obligations are satisfied. Examples are provided for determining variable consideration, allocating transaction price, and principal vs agent considerations. Revenue is recognized over time if criteria are met, otherwise at a point in time.
IFRS 3 establishes principles for accounting for business combinations. It requires acquirers to recognize identifiable assets acquired, liabilities assumed and any non-controlling interest at fair value. Goodwill is recognized as the excess of consideration transferred over the fair value of identifiable net assets. The acquisition method involves 4 steps - identifying the acquirer, determining the acquisition date, recognizing and measuring assets, liabilities and non-controlling interest, and recognizing and measuring goodwill or gain on bargain purchase. IFRS 3 also provides guidance on specific transactions like business combinations achieved in stages and accounting for acquisition costs.
IAS 24 outlines disclosure requirements for related party transactions. It requires entities to disclose (1) transactions with related parties, and (2) relationships between parents and subsidiaries, regardless of whether transactions occurred. Related parties include people or entities that control or significantly influence the reporting entity. Disclosures are intended to draw attention to potential effects of related party transactions on the entity's financial position and profit/loss.
This document outlines the requirements for operating/reporting segments under IFRS 8. Key points include:
1) Operating segments are components of a business for which separate financial information is available and regularly reviewed by chief decision makers.
2) Segments are typically defined based on products, services, regions, or major customers.
3) Similar segments can be combined if they have similar economic characteristics, products/services, customers, distribution, or regulatory environments.
4) A segment must constitute over 10% of certain financial statement items or be reviewed by management to qualify for separate reporting.
IND AS 103 provides guidance on accounting for business combinations. It outlines a 5 step process: 1) identify the acquirer and acquisition date, 2) measure consideration transferred, 3) recognize identifiable assets acquired and liabilities assumed, 4) recognize non-controlling interests, and 5) recognize resulting goodwill or gain on bargain purchase. Consideration includes assets given, liabilities incurred, and equity instruments issued, measured at fair value. Identifiable assets and liabilities are recognized and measured at fair value. Non-controlling interests may be measured at fair value or proportionate share of net assets. Goodwill is recognized as the excess of consideration over fair values. Adjustments may be made to reflect new information for up to one
The document provides an overview of IFRS 1, which outlines the requirements for an entity's first adoption of International Financial Reporting Standards. It discusses the mandatory exceptions and optional exemptions allowed by IFRS 1, including exemptions from full retrospective application for business combinations, share-based payments, and certain assets and liabilities. The document also summarizes the implementation of IFRS 1, including preparation of an opening IFRS balance sheet and reconciliation requirements for financial statement disclosures.
The document summarizes IFRS 3 Business Combinations. It outlines that IFRS 3 specifies that all business combinations must be accounted for using the purchase method. It defines key terms like business, acquisition date, and cost of a business combination. It describes how to identify the acquirer, measure assets and liabilities at fair value on the acquisition date, and account for goodwill and negative goodwill. Significant differences from Indian GAAP are also highlighted.
This document provides an overview of IFRS 17, the International Financial Reporting Standard on insurance contracts. Some key points:
- IFRS 17 establishes principles for accounting, measurement, presentation and disclosure of insurance contracts within its scope. Its objective is to provide useful information to users of financial statements about the effect of insurance contracts on the entity.
- The standard applies to insurance contracts an entity issues and reinsurance contracts it holds. It also applies to some investment contracts with discretionary participation features.
- Insurance contracts are grouped for measurement purposes based on being onerous at inception, having no possibility of becoming onerous, or other remaining contracts. Measurement depends on whether the premium allocation approach or general model is applied
The document provides a summary of key aspects of various Indian Accounting Standards (Ind AS). It discusses the objectives, requirements and differences compared to previous Indian GAAP/ IFRS of various Ind AS like Ind AS 1 on presentation of financial statements, Ind AS 2 on inventories, Ind AS 7 on statement of cash flows, Ind AS 8 on accounting policies etc. For each Ind AS, it highlights important principles, disclosure requirements, and carve outs or differences between Ind AS and corresponding IFRS.
Here is an example of the accounting entries by the lessor APIN for the finance lease:
1 Jan 20X1 (inception of lease)
Dr Receivable $5,710
Cr Machinery $5,710
To record the net investment in the finance lease as a receivable, equal to the present value of lease payments.
31 Dec 20X1
Dr Cash $2,000
Dr Interest income $570
Cr Receivable $2,570
To record receipt of the annual lease payment, and unwind interest on the receivable balance.
The balance sheet will show the receivable of $3,180 as a non-current asset. The income statement will include interest
Summary and Overview of new IFRS 9 on Financial instruments - covering valuation models, the impairment approach for trade receivables, and hedge accounting examples
IFRS 4 provides an interim standard for accounting for insurance contracts until the completion of the insurance contracts project. It defines an insurance contract and requires insurers to continue their existing accounting policies for insurance contracts with some limited improvements. Insurers must conduct a liability adequacy test and provide extensive disclosures on insurance contracts and related risks. The standard also addresses the separation of deposit components from insurance contracts and the accounting for embedded derivatives and discretionary participation features.
This document outlines accounting standards for insurance contracts. Some key points:
1. It provides guidance on accounting for elements of insurance contracts and presenting data in financial statements of insurance companies.
2. It applies to insurance and reinsurance contracts issued by an entity, as well as financial instruments with discretionary participation features.
3. It does not address accounting for other financial assets/liabilities not related to insurance contracts.
4. Recognition and measurement of insurance contracts is addressed, including liability adequacy tests.
The effective date for IFRS 17 is now 2021. The new effective date will mean companies could start planning for the change in 2018 as part of being ready for the new standard by 2021.
The presentation is an effort towards better understanding of the IAS-37, through the use of proper headings, bullets, key points and graphics where needed.
This document provides an overview of IFRS 11 - Joint Arrangements and Associates. It defines joint arrangements as arrangements where two or more parties have joint control based on a contractual agreement. Joint arrangements are classified as either a joint operation or a joint venture depending on the parties' rights and obligations. For a joint operation, parties account for their share of assets, liabilities, revenue and expenses. For a joint venture, parties account for their interest as an investment using the equity method. Examples of each type of arrangement are also provided.
The document provides an overview of International Accounting Standards (IAS) 37, 17, and 19 regarding accounting for liabilities.
IAS 37 covers provisions, contingent liabilities, and contingent assets. It requires provisions to be measured at management's best estimate of the amount required to settle the obligation. IAS 17 distinguishes between finance and operating leases, with different accounting treatments. Finance leases require recognition of an asset and liability, while operating leases do not. IAS 19 addresses accounting for short-term employee benefits, post-employment benefits, other long-term benefits, and termination benefits. Short-term benefits are expensed as incurred without discounting, while other categories require recognition of liabilities.
International Accounting Standard 8 establishes requirements for selecting accounting policies, accounting for changes to accounting policies, changes in accounting estimates, and correcting errors in previously issued financial statements. The standard aims to enhance the relevance and reliability of financial statements and their comparability over time and across entities. It requires retrospective application for changes in accounting policies, retrospective restatement to correct errors in prior periods, and prospective application for changes in accounting estimates. Extensive disclosures are also required.
The document provides an overview of IFRS 16 Leases by Fred Nieto, Head of Investor Engagement at the IASB. It discusses key facts about IFRS 16 including the sectors most affected, the effective date of 2019, and accounting changes for lessees and lessors. The presentation then covers the essentials of IFRS 16 including the definition of a lease, recognition of right-of-use assets and lease liabilities, income statement impact, and intended benefits of improved comparability. Finally, it discusses new disclosure requirements and how restatement under the new standard will work.
IFRS 4: Insurance Contract & IAS 24: Related Party DisclosureM.K.Jahid Shuvo
The document discusses IFRS 4 on insurance contracts and IAS 24 on related party disclosures. IFRS 4 provides an interim standard for insurance accounting until a final standard is developed. IAS 24 requires disclosure of relationships and transactions between related parties, which include entities that control or significantly influence other entities. Key details to disclose for related parties include transaction types and volumes, pricing policies, and outstanding balances.
This document defines key terms related to revenue recognition under IFRS 15, including revenue, contracts, contract assets and liabilities. It then summarizes the 5-step model for recognizing revenue: 1) identify the contract, 2) identify separate performance obligations, 3) determine transaction price, 4) allocate price to obligations, 5) recognize revenue when obligations are satisfied. Examples are provided for determining variable consideration, allocating transaction price, and principal vs agent considerations. Revenue is recognized over time if criteria are met, otherwise at a point in time.
IFRS 3 establishes principles for accounting for business combinations. It requires acquirers to recognize identifiable assets acquired, liabilities assumed and any non-controlling interest at fair value. Goodwill is recognized as the excess of consideration transferred over the fair value of identifiable net assets. The acquisition method involves 4 steps - identifying the acquirer, determining the acquisition date, recognizing and measuring assets, liabilities and non-controlling interest, and recognizing and measuring goodwill or gain on bargain purchase. IFRS 3 also provides guidance on specific transactions like business combinations achieved in stages and accounting for acquisition costs.
IAS 24 outlines disclosure requirements for related party transactions. It requires entities to disclose (1) transactions with related parties, and (2) relationships between parents and subsidiaries, regardless of whether transactions occurred. Related parties include people or entities that control or significantly influence the reporting entity. Disclosures are intended to draw attention to potential effects of related party transactions on the entity's financial position and profit/loss.
This document outlines the requirements for operating/reporting segments under IFRS 8. Key points include:
1) Operating segments are components of a business for which separate financial information is available and regularly reviewed by chief decision makers.
2) Segments are typically defined based on products, services, regions, or major customers.
3) Similar segments can be combined if they have similar economic characteristics, products/services, customers, distribution, or regulatory environments.
4) A segment must constitute over 10% of certain financial statement items or be reviewed by management to qualify for separate reporting.
IND AS 103 provides guidance on accounting for business combinations. It outlines a 5 step process: 1) identify the acquirer and acquisition date, 2) measure consideration transferred, 3) recognize identifiable assets acquired and liabilities assumed, 4) recognize non-controlling interests, and 5) recognize resulting goodwill or gain on bargain purchase. Consideration includes assets given, liabilities incurred, and equity instruments issued, measured at fair value. Identifiable assets and liabilities are recognized and measured at fair value. Non-controlling interests may be measured at fair value or proportionate share of net assets. Goodwill is recognized as the excess of consideration over fair values. Adjustments may be made to reflect new information for up to one
The document provides an overview of IFRS 1, which outlines the requirements for an entity's first adoption of International Financial Reporting Standards. It discusses the mandatory exceptions and optional exemptions allowed by IFRS 1, including exemptions from full retrospective application for business combinations, share-based payments, and certain assets and liabilities. The document also summarizes the implementation of IFRS 1, including preparation of an opening IFRS balance sheet and reconciliation requirements for financial statement disclosures.
The document summarizes IFRS 3 Business Combinations. It outlines that IFRS 3 specifies that all business combinations must be accounted for using the purchase method. It defines key terms like business, acquisition date, and cost of a business combination. It describes how to identify the acquirer, measure assets and liabilities at fair value on the acquisition date, and account for goodwill and negative goodwill. Significant differences from Indian GAAP are also highlighted.
This document provides an overview of IFRS 17, the International Financial Reporting Standard on insurance contracts. Some key points:
- IFRS 17 establishes principles for accounting, measurement, presentation and disclosure of insurance contracts within its scope. Its objective is to provide useful information to users of financial statements about the effect of insurance contracts on the entity.
- The standard applies to insurance contracts an entity issues and reinsurance contracts it holds. It also applies to some investment contracts with discretionary participation features.
- Insurance contracts are grouped for measurement purposes based on being onerous at inception, having no possibility of becoming onerous, or other remaining contracts. Measurement depends on whether the premium allocation approach or general model is applied
The document provides a summary of key aspects of various Indian Accounting Standards (Ind AS). It discusses the objectives, requirements and differences compared to previous Indian GAAP/ IFRS of various Ind AS like Ind AS 1 on presentation of financial statements, Ind AS 2 on inventories, Ind AS 7 on statement of cash flows, Ind AS 8 on accounting policies etc. For each Ind AS, it highlights important principles, disclosure requirements, and carve outs or differences between Ind AS and corresponding IFRS.
Here is an example of the accounting entries by the lessor APIN for the finance lease:
1 Jan 20X1 (inception of lease)
Dr Receivable $5,710
Cr Machinery $5,710
To record the net investment in the finance lease as a receivable, equal to the present value of lease payments.
31 Dec 20X1
Dr Cash $2,000
Dr Interest income $570
Cr Receivable $2,570
To record receipt of the annual lease payment, and unwind interest on the receivable balance.
The balance sheet will show the receivable of $3,180 as a non-current asset. The income statement will include interest
Summary and Overview of new IFRS 9 on Financial instruments - covering valuation models, the impairment approach for trade receivables, and hedge accounting examples
IFRS 4 provides an interim standard for accounting for insurance contracts until the completion of the insurance contracts project. It defines an insurance contract and requires insurers to continue their existing accounting policies for insurance contracts with some limited improvements. Insurers must conduct a liability adequacy test and provide extensive disclosures on insurance contracts and related risks. The standard also addresses the separation of deposit components from insurance contracts and the accounting for embedded derivatives and discretionary participation features.
This document outlines accounting standards for insurance contracts. Some key points:
1. It provides guidance on accounting for elements of insurance contracts and presenting data in financial statements of insurance companies.
2. It applies to insurance and reinsurance contracts issued by an entity, as well as financial instruments with discretionary participation features.
3. It does not address accounting for other financial assets/liabilities not related to insurance contracts.
4. Recognition and measurement of insurance contracts is addressed, including liability adequacy tests.
IFRS 17 is a new accounting standard for insurance contracts that will replace IFRS 4. It was published by the IASB in May 2017 and applies to annual periods beginning on or after January 1, 2021. IFRS 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. It requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. IFRS 17 also requires extensive disclosures to increase transparency of accounting policies, recognized amounts and risk exposure. The standard is expected to significantly impact insurers' financial reporting and operations.
This document summarizes a tradesman liability insurance policy for AB Roofing Solutions Ltd. The 3-page schedule provides key policy details including:
- The policy period is from April 20, 2015 to April 19, 2016.
- Coverage limits for employers' liability and public/products liability.
- A GBP1,500 excess applies to public/products liability claims.
- The policy is based on 6 employees (5 manual, 1 non-manual) and is adjustable if employee numbers change.
- Various endorsements and conditions are attached relating to asbestos, use of heat, height restrictions, and personal protective equipment.
One of the next major challenges for insurance companies is the migration to IFRS 17, the stakeholders are
to understand the global goals of the standard. This paper is drafted in order to get a global understanding
of the standard and a high level summary of its liability measurement methodology.
Ifrs Accounting For Insurance Ashley Patel Pricewaterhouse Coopers [Autosa...Kush25
The document summarizes key points from a presentation on accounting for insurance contracts given at a workshop. It discusses the objectives of IFRS 4 Phase I, key problems with the interim standard, comments from analysts about lack of transparency, and the status and key aspects of the IASB's Phase II project to develop a new standard, including the proposed exit value model and contentious issues raised in response to the discussion paper. It also provides a high-level comparison to the EU's Solvency II framework and outlines some practical implications for financial reporting, operations, and resources.
Ifrs Accounting For Insurance Ashley Patel Pricewaterhouse Coopers [Autosa...Kush25
The document summarizes key points from a presentation on accounting for insurance contracts given at a workshop. It discusses the objectives of IFRS 4 Phase I, key problems with the interim standard, comments from analysts, and the status and key aspects of the IASB's Phase II project to develop a new standard, including the proposed exit value model and issues raised in response to the discussion paper. It also briefly compares the proposed model to the EU's Solvency II framework and outlines some practical implications of the new requirements.
Ifrs Accounting For Insurance Ashley Patel Pricewaterhouse Coopers [Autosa...Kush25
The document summarizes key points from a presentation on accounting for insurance contracts given at a workshop. It discusses the objectives of IFRS 4 Phase I, key problems with the interim standard, comments from analysts, and the status and key aspects of the IASB's Phase II project to develop a new standard, including the proposed exit value model and issues raised in response to the discussion paper. It also provides a high-level comparison to the EU's Solvency II framework and outlines some practical implications of the new requirements.
This document is a civil liability professional indemnity insurance policy. It provides insurance coverage for legal liability arising from the insured's professional services.
The policy outlines the insuring clause, limits of coverage, excess amounts, extensions of coverage for costs and expenses, optional extensions, exclusions from coverage, claims conditions, general conditions, definitions, and notices regarding the insured's duty of disclosure. It specifies coverage for claims made against the insured during the policy period and notified to the insurer.
This document is a professional indemnity insurance policy for Bizcover Online Miscellaneous Risks. It provides coverage for civil liability arising from the conduct of professional services. Key details include:
- Coverage is provided on a claims made basis for claims first made and notified during the policy period.
- The limit of indemnity is the maximum the insurer will pay for any one claim, and the aggregate limit is the maximum for all claims during the policy period.
- Insured costs are covered in addition to or inclusive of the limit of indemnity depending on the basis of limit specified in the schedule.
- The policy outlines various extensions of coverage including compensation for court attendance, continuous cover
Accounting services overview of insurance contract under ifrsAhmedTalaat127
The majority of accounting services in Dubai and UAE ignore insurance accounting because they are not in the insurance business. Now that there will be a new accounting standard related to insurance contracts, chartered accountants should check to make sure they aren’t erroneously issuing them.
Learning About Your Insurance Policy.pdfIGI general
The document discusses the key components of an insurance policy, including:
- The declarations page that specifies the insured, risks covered, policy limits, and duration.
- The insuring agreement that lists what is covered and the insurer's guarantees to pay damages for covered risks.
- Exclusions that list risks, losses, or assets not covered by the policy.
- Conditions that limit the insurer's obligations and require steps like submitting proof of loss.
- Definitions that explain important terms used in the policy.
- Riders and endorsements that can modify the original policy when renewed. Thoroughly reviewing all components helps policyholders understand their obligations and coverage.
International Financial Reporting Standard 4 IFRS (Insurance Contracts) Hina Khan
This document provides an overview of International Financial Reporting Standard 4 (IFRS 4) on insurance contracts. IFRS 4:
- Sets out disclosure requirements to help users understand insurance contract amounts and risks in financial statements.
- Temporarily exempts insurers from some IFRS requirements until a new standard is developed, while requiring liability adequacy testing and reinsurance asset impairment testing.
- Generally allows insurers to continue existing accounting practices but prohibits some, like provisions for nonexistent claims.
This document outlines key aspects of reinsurance. It begins by defining reinsurance as the transfer of insurance risks from insurance companies to other insurers through contracts. It then discusses the main types of reinsurance: compulsory, optional, and contractual. Next, it lists the main components of a reinsurance contract, such as the original insurer, reinsurer, assigned quota, and reinsurance commission. It also covers some common roles in reinsurance like brokers. Finally, it discusses the importance of reinsurance in stabilizing loss rates, supporting companies in accepting large risks, and helping distribute losses.
- The advance payment is an interest-free loan from the Employer to the Contractor to cover mobilization costs and improve cash flow. It is paid in installments upon the Contractor providing a guarantee and performance security.
- The advance payment amount and repayment terms are specified in the contract's Appendix to Tender. The payment is repaid through proportional deductions from payment certificates.
- If the advance payment is not repaid according to the contract terms, the outstanding balance becomes immediately due from the Contractor to the Employer.
IAS 37 sets out the accounting treatment and disclosure requirements for provisions, contingent liabilities, and contingent assets. A provision is recognized when an entity has a present obligation from a past event, an outflow of resources is probable to settle the obligation, and the amount can be reliably estimated. Contingent liabilities are possible obligations that arise from past events whose existence will be confirmed only by uncertain future events or are present obligations where an outflow is not probable or cannot be reliably estimated. Contingent assets are possible assets from past events that will be confirmed only by uncertain future events. The standard provides guidance on recognition criteria, measurement, presentation, and disclosure of provisions, contingent liabilities, and contingent assets.
Clause 4.2 Performance Security-Understanding Clauses in FIDIC ‘Conditions of...Divyanshu Dayal
The document discusses performance security under FIDIC conditions of contract. Performance security is usually 10% of the contract price and is valid until the contractor has completed the works and remedied any defects. The employer can claim under the performance security if the contractor fails to extend the validity period, fails to pay amounts owed, or fails to remedy a default. The performance security is returned once the contractor is entitled to the performance certificate.
The document discusses Errors & Omissions / Directors & Officers Liability Insurance for hedge funds. It covers what the policy insures (claims from investors, regulators for negligent acts), who is insured (investment manager, individuals, funds), the policy structure (declarations, forms, parts covering investment manager E&O, D&O, fund E&O/D&O), and key details like claims-made structure, prior acts coverage, limits, retentions, defense process, exclusions and underwriting factors.
This document discusses international insurance regulation, specifically regarding the differences between property/casualty and life insurance contracts and their accounting implications. Key points include:
- Property/casualty contracts are usually short-term while life/annuity contracts are long-term, spanning decades.
- Claims outcomes for property/casualty insurance vary widely each year depending on events, while life insurance claims are more predictable.
- Statutory accounting principles (SAP) and generally accepted accounting principles (GAAP) have some differences in how they value assets and recognize revenues and expenses.
2. AGENDA
Introduction and Overview
Definition of an Insurance Contract
Accounting for Insurance Contracts
Financial Components and investment contracts
Disclosures
3. NEED FOR AN INTERNATIONAL STANDARD ON INSURANCE
Diversity in accounting practice for insurance contracts internationally
Accounting practices for insurance contracts differ from practices in
other sectors
Other IFRSs do not address accounting for insurance contracts
4. OVERVIEW OF IASB & FASB JOINT INSURANCE PROJECT
Phase I
Objective was to:
Make limited improvements to accounting for insurance contacts
Provide disclosures that identify and explain amounts in an insurer‟s
financial statements arising from insurance contracts and provide
information about the amount, timing and uncertainty of future cash
flows from insurance contracts until the board completes phase II
Resulted in IFRS 4 Insurance contracts, an interim standard that permits
a wide variety of accounting practices for insurance contracts.
5. OVERVIEW OF IASB & FASB INSURANCE PROJECT(CONT’D)
Phase II
Currently ongoing
Objective is to develop a standard to replace the interim insurance
standard and to provide a basis for consistent accounting for insurance
contracts in the longer term
Joint project with FASB
DP Preliminary view on insurance contracts published in May 2007
ED expected in near future
6. OVERVIEW OF IFRS 4
Defines an insurance contract and focuses on types of contracts rather
than types of entities
Applies to:
Insurance contracts, including reinsurance contracts, that an entity
issues
Reinsurance contracts that an entity holds
Financial instruments issued with a discretionary participation features
Does not address accounting by policy holders
Does not apply to other assets and other liabilities of an insurer, such as
financial assets and financial liabilities within the scope of IAS 39/ IFRS
9
7. OVERVIEW OF IFRS 4 (CONT’D)
Generally insurers are required to continue their existing accounting
policies with respect to insurance contracts except where the standard
requires or permits changes in accounting policies
Requires some embedded derivatives and some deposit components to
be separated from insurance contracts
Requires a minimum liability adequacy test to be applied to recognized
insurance liabilities
Requires significant disclosures of the terms, conditions and risk
related to insurance contracts, consistent in principle with those
required for financial assets and liabilities
8. INSURANCE CONTRACTS – SCOPE EXEMPTION
Product warranties issued directly by a manufacturer, dealer or retailer
Employers assets and liabilities under employee benefit plans
Contractual right and obligations contingent on future use or right to
use a non-financial item (e.g. some royalties) and lessee‟s residual
value guarantee embedded in a finance lease
Financial guarantee contracts, except for contracts previously
accounted for as insurance contracts in respect of which issuer may
choose to apply IAS 39/IFRS 9
Contingent consideration payable or receivable in a business
combination
Direct insurance contracts held by policyholder
9. DEFINITION OF INSURANCE CONTRACTS
The definition of IFRS 4 refers to some traditional features of insurance
contracts, distinguishing them from financial instruments.
IFRS 4 definition:
“ a contract under which one party (the insurer) accepts significant
insurance risk from another party (the policyholder) by agreeing to
compensate the policyholder if a specified uncertain future event
(the insured event) adversely affect the policyholder”
10. INSURANCE RISK VS FINANCIAL RISK
INSURANCE RISK FINANCIAL RISK
Risk, other than financial risk,
transferred from the holder of
a contract to the issuer.
Risk of a potential future change in one
or more of:
Interest rate
Security price
Commodity price
Foreign exchange risk
Index of prices or rates
Credit rating
Credit index
Other variables, such as a non-financial
variable, that is not specific to a party to
the contract
Some insurance contracts expose the issuer to both insurance risk and financial risk. If insurance risk is
significant, such contracts are insurance contracts.
11. SIGNIFICANT INSURANCE RISK
Insurance risk is significant if, and only if, an insured even could cause
an insurer to
Pay significant additional benefits
In any scenario
Excluding scenarios that lack commercial substance
The condition may be met even if the insured event is extremely unlikely
or even if the expected (i.e. probability weighted) present value of
contingent cash flows is a small portion of expected present value of
contractual cash flows
„Additional benefits‟ are amounts in excess of those that would be
payable if no insured event occurred
12. SIGNIFICANT INSURANCE RISK (CONT’D)
Significance of insurance risk is to be assessed on a contract by
contract basis
If a relatively homogenous book of small contracts is known to consist
of contracts that all transfer insurance risk, an insurer need not
examine each contract within that book to identify a few non –
derivative contracts that transfer insignificant insurance risk
13. UNCERTAIN FUTURE EVENTS
Uncertainty (or risk) is the essence of an insurance contract
At least one of the following should be uncertain at the inception of an
insurance contract
Whether an insured event will occur
When it will occur
How much the insurer will need to pay if it occurs
14. CASE STUDY 1
Saving contract – investor pays in stream of money which insurer
invests in bonds
At the end of the fixed term contract, investor receives amount paid to
insurer plus interest linked to the return on bonds
Contract contains a clause that if the investor dies during the term of
contract, 110% of balance outstanding ( principal + interest accrued)
would be paid out of the investor‟s beneficiary
15. CASE STUDY 2
Unit – linked savings contract containing guaranteed minimum death or
survival benefits.
Benefit payable either upon the death of policy holder or upon maturity
of the contract, if the guaranteed minimum benefit is higher than the
unit value at the time a claim is made
If the contract is surrendered, then the policy holder receives cash for
the value of the units surrendered (less surrender penalties)
16. ACCOUNTING OF INSURANCE CONTRACTS
Temporary exemption from the IAS 8 hierarchy
IFRS 4 exempts an insurer from applying IAS 8 hierarchy (Para 10-
12) for developing accounting policies for insurance contracts
The implication of this temporary exemption is that accounting
policies for insurance contracts are generally retained during phase I,
with some exceptions
The objective of this exemption in phase I of the insurance project
was to avoid, for insurers transitioning to IFRSs, changes in
accounting for insurance contracts ahead of Phase II of the project
17. LIMITATIONS OF IAS 8 EXEMPTION
The IAS 8 exemption does not exempt an insurer from some implications of
para 10-12 of IAS 8; specifically an insurer should
Not recognize as a liability any provisions for possible future claims under
insurance contracts that are not in existence at the end of the reporting
period, such as catastrophe and equalization provisions
Carry out a liability adequacy test
Remove an insurance liability from its statement of financial position only
when the obligation specified in the contract is extinguished
An insurer should
Not offset
Reinsurance assets against the related insurance liabilities, or
Reinsurance income and expenses against expenses or income from the
related insurance contracts
Consider whether its reinsurance assets are impaired
18. LIABILITY ADEQUACY TEST
An insurer should assess at the end of each reporting period whether
its recognized insurance liabilities are adequate, using current
estimates of future cash flows under its insurance contracts
IFRS 4 only specifies minimum requirements for conducting the liability
adequacy test
The test considers current estimates of all contractual cash flows, and
of related cash flows such as claims handling cost, as well as cash
flows resulting from embedded options and guarantees
If liability is inadequate, entire deficiency is recognized in profit or loss
19. LIABILITY ADEQUACY TEST (CONT’D)
If existing accounting policies include an
assessment that meets the specified
minimum requirements, no further action
required
If current policy is not sufficient to comply
with IFRS 4, then the carrying amount of
the liability should be tested against the
requirements of IAS 37 and, if necessary
increased ( DR PL, CR liability)
If
not?
20. IMPAIRMENT OF REINSURANCE ASSETS
A cedant should consider at each reporting date whether its
reinsurance assets are impaired
A reinsurance asset is impaired if, any only if
There is a objective evidence, as a result of an event that occurred after
initial recognition of the reinsurance asset, that the cedant may not
receive all amounts due to it under the terms of the contract; and
That event has a reliably measurable impact on the amounts that the
cedant will receive from the reinsurer
21. CHANGE IN ACCOUNTING POLICIES
An insurer may change its accounting policies for insurance contracts
if, and only if, the changes make the financial statements
More relevant for decision making and no less reliable; or
More reliable and no less relevant
An insurer judges relevance and reliability using the criteria in IAS 8
This guidance applies to both changes made by an insurer applying
IFRSs and to changes made by insurers adopting IFRSs for the first time
22. CHANGE IN ACCOUNTING POLICIES ( CONT’D)
Current market interest rates
An insurer is permitted, but not required, to change its accounting
policies so that it remeasures designated insurance liabilities to reflect
current market interest rates and recognizes changes in those liabilities
in profit and loss
Shadow accounting
An insurer may apply “shadow accounting” to remeasure insurance
liabilities to reflect recognized but unrealized gains and losses on
related financial assets in the same way as realized gain and losses.
Adjustments to the insurance liabilities are recognized in other
comprehensive income only if the unrealized gains and losses on the
related assets are recognized in other comprehensive income
23. CHANGE IN ACCOUNTING POLICIES ( CONT’D)
An insurer may continue the following practices, but not introduce
them:
Measuring insurance liabilities on an undiscounted basis
Using non – uniform accounting policies for insurance contracts ( and
related deferred acquisition costs and related intangible assets, if any)
of subsidiaries
Insurer need not change accounting policy to eliminate excessive
prudence but cannot introduce additional prudence if insurance
contracts are already measured with sufficient prudence
24. CHANGE IN ACCOUNTING POLICIES ( CONT’D)
An insurer is permitted to continue applying and permitted to introduce
following accounting policies
Using shadow accounting
Remeasure designated insurance liabilities to reflect current market
interest rates / other assumptions and recognize changes in those
liabilities in profit and loss
25. INSURANCE AND INVESTMENT CONTRACTS
Unbundling of deposit component
Some insurance contracts contain both an insurance component and
a deposit component. For such contracts
Unbundling of a deposit component is permitted if
The deposit component can be measured separately; and
Insurer’s accounting policies require it to recognize all rights and
obligations arising from the deposit component, regardless of the
basis used to measure those rights and obligations
Unbundling of a deposit component is required if:
The deposit component can be measured separately; and
Insurer’s accounting policies do not otherwise require it to recognize
all rights and obligations arising from the deposit component
26. Unbundling of deposit component ( cont‟d)
Unbundling of a deposit component is prohibited if:
An insurer cannot measure the deposit component separately
27. EMBEDDED DERIVATIVES
A embedded derivative is a component of a hybrid (combined) contract
that includes both the derivative and a host contract
Components of insurance contracts that meet the definition of a
derivative are within the scope of IAS 39 / IFRS 9 and are therefore
subject to the general requirements for embedded derivatives under IAS
39 / IFRS 9:
However, there are two exceptions:
Components that meet the definition of an insurance contract ( e.g.;
components that transfer significant insurance risk); and
Surrender options with fixed terms
28. EMBEDDED DERIVATIVES (CONT’D)
As insurance contracts are not within the scope of IFRS 9, the
requirements in that standard to separate embedded derivatives are not
applicable to insurance contracts embedded in a host contract. A
component meeting the definition of an insurance contract does not
need to be separated from its host contract
For example, an option to take a life-contingent annuity contract would
not be separated from a host insurance contract
29. EMBEDDED DERIVATIVES (CONT’D)
Surrender option with fixed terms
A policyholder option to surrender an insurance contract
For a fixed amount
Or for an amount based on a fixed amount and an interest rate
Even if the exercise price differs from the carrying amount of the host
insurance liability
need not be separated from the host insurance contract
30. DISCRETIONARY PARTICIPATION FEATURES
Definition
A contractual right to receive, as a supplement to guaranteed benefits,
additional benefits
That are likely to be a significant portion of the total contractual
benefits;
Whose amounts or timing is contractually at the discretion of the issuer;
and
That are contractually based on, the performance of a specified pool of
contracts, or investment returns on a specified pool of assets owned by
the issuer, or the profit or loss of the issuer of the contract
IFRS 4 addresses limited aspects of DPFs contained in insurance
contracts or in financial instruments
31. DISCLOSURES
Disclosures comprise
Explanation of recognized amounts
Nature and extent of risks arising from insurance contracts
Explanation of recognized amounts
Accounting policies for insurance contracts and related assets, liabilities,
income and expense
Amounts of recognized assets, liabilities, income and expense arising from
insurance contracts, as well as gains/ losses recognized on reinsurance by
the cedant
How the most significant assumptions used to measure recognized amounts
are determined, and if practicable, quantified disclosure of assumptions
Effect of changes in assumptions used to measure insurance assets and
liabilities
32. DISCLOSURES (CONT’D)
Nature and extent of risks
Risk management objectives, policies and processes, and method used
for managing risk from insurance contracts
Sensitivity of insurance risk
Concentrations of insurance risk
Actual claims compared with previous estimates, i.e. claims
development
Information about credit risk, liquidity risk and market risk that IFRS 7
would require if the insurance contracts were within the scope of IFRS
7, with certain exceptions