ED 319 and Fatal-Flaw Review Draft Standard: Insurance Contracts in the Public Sector
Wednesday, March 9, 2022
The AASB has issued an Exposure Draft proposing public-sector-specific modifications to AASB 17 Insurance Contracts. In addition, a Fatal-Flaw Review Draft version of an Amending Standard proposing related consequential amendments is available for comment.
ED 319 Insurance Contracts in the Public Sector
Together with the NZASB, the AASB is proposing in ED 319 the following public-sector-specific modifications to AASB 17:
- an exemption from sub-grouping onerous versus non-onerous contracts at initial recognition;
- an exemption from sub-grouping contracts issued no more than a year apart;
- an amendment to the initial recognition requirements so that they do not depend on when contracts become onerous;
- guidance on coverage periods, which has consequences for assessing eligibility for the premium allocation approach in a public sector context;
- indicators for identifying the transactions to which AASB 17 should apply in a public sector context; and
- guidance on determining the cash flows within the contract boundary.
ED 319 also proposes to defer the AASB 17 mandatory application date for public sector entities until annual periods beginning on or after 1 July 2025, with earlier application permitted.
Fatal-Flaw Review Draft of AASB 2022-X Amendments to Australian Accounting Standards – Insurance Contracts: Consequential Amendments for Public Sector Entities
In addition to ED 319, the AASB issued a Fatal-Flaw Review Draft version of a Standard proposing consequential amendments to various AASB pronouncements that would:
- repeal AASB 1038 Life Insurance Contracts and supersede Interpretation 1047 Professional Indemnity Claims Liabilities in Medical Defence Organisations, which are no longer needed for annual reporting periods beginning on or after 1 January 2023; and
- amend pronouncements that mention AASB 4 Insurance Contracts and AASB 1023 General Insurance Contracts to clarify that these Standards continue to apply to public sector entities for annual periods beginning after 1 January 2023 until a Standard making public-sector-specific modifications to AASB 17 is effective or applied.
Please submit your comments on ED 319 and the Fatal-Flaw Review Draft Standard to the AASB by Wednesday 8 June 2022, via the AASB website or email.