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Financial Reporting and the Law

At a recent meeting, the FASB decided to limit the scope of its proposed Accounting Standards Update to insurance companies only, rather than having the insurance contracts project include all entities that issue insurance contracts, as we discussed in our February 24 post. The project’s focus will now be on making targeted improvements to existing U.S. GAAP. For long-duration insurance contracts (i.e., for most life, annuity, and long-term health contracts), the FASB concluded that it should consider decisions reached by the International Accounting Standards Board (IASB) on its insurance contracts exposure draft when contemplating improvements to U.S. GAAP. The FASB decided to limit targeted improvements for short-duration contracts (i.e., for most property, liability, and short-term health contracts) to enhancing disclosures. The FASB’s decisions suggest that it is not likely that the FASB’s standard will be converged with that issued by the IASB on this topic unless the IASB also makes changes to its exposure draft.