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Revised exposure draft will significantly change accounting for insurance contracts
On 20 Jun 2013, the IASB (‘the Board’) published a revised exposure draft (ED) on the accounting for insurance contracts reflecting its response to the comments received on the 2010 ED (‘previous ED’). The comprehensive proposals will fundamentally change the accounting by insurers and other entities that issue insurance contracts. The Board has attempted to address the concerns of constituents regarding the perceived ‘artificial’ volatility caused by the proposals in the previous ED, but these changes add complexity. The proposed standard will replace IFRS 4, which currently permits a wide variety of accounting practices for insurance contracts. This practical guide summarises the key proposals and their implications.