Temporary exemption from some other AustTemporary exemption from some other Australian Accounting Standards

Temporary exemption from some other Australian Accounting Standards

13 Paragraphs 10-12 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors specify criteria for an entity to use in developing an accounting policy if no Standard applies specifically to an item. However, this Standard exempts an insurer from applying those criteria to its accounting policies for:

(a) insurance contracts that it issues (including related acquisition costs and related intangible assets, such as those described in paragraphs 31 and 32); and

(b) reinsurance contracts that it holds.

14 Nevertheless, this Standard does not exempt an insurer from some implications of the criteria in paragraphs 10-12 of AASB 108. Specifically, an insurer:

(a) shall not recognise as a liability any provisions for possible future claims, if those claims arise under insurance contracts that are not in existence at the end of the reporting period (such as catastrophe provisions and equalisation provisions);

(b) shall carry out the liability adequacy test described in paragraphs 15-19;

(c) shall remove an insurance liability (or a part of an insurance liability) from its statement of financial position when, and only when, it is extinguished – that is, when the obligation specified in the contract is discharged or cancelled or expires;

(d) shall not offset:

(i) reinsurance assets against the related insurance liabilities; or

(ii) income or expense from reinsurance contracts against the expense or income from the related insurance contracts; and

(e) shall consider whether its reinsurance assets are impaired (see paragraph 20).