2020 Life and Health Insurance Entities - Audit and Accounting Guide
This resource brings you the practical, how-to accounting and auditing guidance you need to stay compliant.
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E-book, Paperback
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Product Number
AAGLHI20E
Practical, how-to accounting and auditing guidance you need to stay compliant
Whether you’re a CPA performing audit engagements or management at an insurance entity, it is critical for you to understand and be current on the specialized accounting and regulatory requirements you’re subject to. This resource brings you the practical, how-to accounting and auditing guidance you need to stay compliant. The 2020 edition provides valuable background on the life and health insurance industry, products and regulatory issues, and the related transaction cycles that an insurance entity is involved with. It covers recent regulatory updates, including providing information on the standards for long-duration contracts, financial instruments, and leases.
Key Features and Benefits
This guide was developed by the former Insurance Companies Committee and the Life Insurance Audit Guide Task Force. This edition of the guide has been modified by the AICPA staff to include certain changes necessary due to the issuance of authoritative guidance since the first edition and other revisions as deemed appropriate. Relevant guidance contained in standards issued through October 1, 2020 is included. This guide includes appendixes that will help you understand the standards for long-duration contracts, financial instruments, leases, and revenue recognition.
- Includes accounting implementation papers released on applying FASB ASU 2018-12: Targeted Improvements to the Accounting for Long-Duration Contracts
- Reviews the characteristics of life insurance products, as well as a background of all the related transaction cycles that an insurance entity is involved with
- Provides helpful information for developing audit plans of life insurance entities (especially auditing investments, inforce files, reinsurance, insurance revenues, liabilities for future policy benefits, income taxes and deferred acquisition costs)
- Allows you to easily educate your staff on life and health insurance
- Includes accounting and auditing issues related to the Patient Protection and Affordable Care Act for assessments and premium stabilization programs (FASB ASC 720-50, SSAP No.106, Affordable Care Act Section 9010 Assessment, and SSAP No. 107, Accounting for the Risk-Sharing Provisions of the Affordable Care Act)
- Provides AICPA NAIC Task Force and the NAIC/AICPA Working Group document, “Best Practices: Insurance Regulator Access to Audit Documentation”
Appendix G: FASB ASU No. 2018-12: Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, Accounting Implementation Papers, is included in the online subscription of the Life and Health Insurance Entities – Audit and Accounting Guide. This appendix presents accounting implementation papers developed to assist insurance entities in applying FASB ASU No. 2018-12. The appendix will be updated as accounting implementation papers are finalized. Please see the Insurance Expert Panel webpage for the status of the accounting implementation papers:
Below is a listing of the finalized accounting implementation papers that are included in the appendix as of December 23, 2020:
| Issue Number | |
|---|---|
| Considerations for the Allocation of the Liability for Future Policy Benefits to Revised Units of Account at Transition to ASU No. 2018-12 for Blocks of Business That Had Loss Recognition Prior to the Transition Date | 2 |
| Claim Liabilities Associated With Long-Duration Traditional Insurance Contracts | 1 |
| Market Risk Benefits — Considerations Related to Transition | 4AB |
| Updating Cash Flow Assumptions in the Net Premium Ratio | 8 |
| Upon Adoption of ASU No. 2018-12, Is It Permissible for an Entity to Change Its Accounting Policy for All Products to Include the Cost of Reinsurance in Loss Recognition Testing? | 11D |
| Amortization of Deferred Acquisition Cost | 9ABCD |
| Ceded Reinsurance - Recognition of the Reinsurance Recoverable and Cost of Reinsurance Measurement; The Liability for Future Policy Benefits to Be Used to Reinsure Existing Traditional Life Insurance Contracts; and Application of the 100% Net Premium Ratio Cap and “Floor” (No Negative Liability) Provisions Relating to the Liability for Future Policy Benefits on Ceded Reinsurance Transactions | 11ABC |
| Impact of ASU No. 2018-12 on Shadow Accounting | 13 |
Updates
- ASU 2019-09, Financial Services—Insurance (Topic 944)
- ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, Accounting Implementation Papers
- Accounting implementation papers for applying ASU 2018-12
- ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities
- ASU No. 2015-09, Financial Services—Insurance (Topic 944): Disclosures about Short-Duration Contracts
- Revenue Recognition implementation issue for insurance entities applying FASB ASC 606, Considerations for Applying the Scope Exception in FASB ASC 606-10-15-2 and 606-10-15-4 to Contracts Within the Scope of FASB ASC 944
- AICPA Q&A Section 7100.15: Insurance Companies and the Definition of Public Business Entity
- AICPA Technical Questions and Answers, Section 9180, Required Supplementary Information
- Revisions to SSAP No. 107,Accounting for the Risk-Sharing Provisions of the Affordable Care Act, and NAIC INT 15-01: ACA Risk Corridor Collectibility
- INT 18-01: ACA Section 9010 Assessment Moratoriums
- Business and industry financial managers need this product to stay up to date with current GAAP and statutory accounting relevant to life and health insurance entities.
- Small firms need this product to stay up to date on current GAAP and statutory accounting and audit guidance related to life and health insurance entities. This product also provides a good background of the life and health insurance industry, products and regulatory issues.
- Large firms need this product to serve as background on GAAP and statutory accounting and audit guidance related to life and health insurance entities.
- Users of life and health insurance entity financial statements need this product for background on the industry, and information on current GAAP and statutory accounting for life and health insurance entities.
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