Mario Christodoulou, Accountancy Age, Wednesday 4 August 2010 at 10:29:00

IASB chief describes current rules as "impenetrable"

The international accounting standard setter has released new proposals for insurance contracts which seek to demystify one of the most complex areas of company reporting.

The rules aim to transform current rules, said to be all but indecipherable for investors, to a model which helps to communicate the contract economics.

David Tweedie, chairman of the International Accounting Standards Board, described new rules as long overdue and believes the proposals will better reflect the substance of insurance transactions.

?Current practice [results] in financial information that is impenetrable to all but the most expert of users,? he said.

?The proposed standard better reflects the economics of insurance contracts, and would result in more relevant, understandable and comparable information being available to investors.?

The board has proposed a ?building block approach? which focuses on the
</br> timing and uncertainty of future cash flows and relies on drivers of profitability.

The proposals will be exhibited for comment until 30 November.

Further reading:

IASB proposes improvements to insurance accounting

SNAPSHOT: Insurance Contracts