New accounting and reporting requirements for entities with insurance contracts published Thursday by the UK Financial Reporting Council (FRC) are intended to provide interim guidance in UK and Irish GAAP while the International Accounting Standards Board (IASB) completes its insurance contracts project.
FRS 103, Insurance Contracts, generally allows entities to continue with their current accounting practices for insurance contracts. But the new standard permits entities the same flexibility to make improvements – subject to legal and regulatory requirements – as entities in the UK and Republic of Ireland that apply IFRS.
The standard was developed from existing IFRS. Along with accompanying implementation guidance published Thursday, FRS 103 consolidates UK and Irish financial reporting requirements and guidance for insurance contracts.
The FRC expects to review FRS 103 and consult on any proposed changes after the IASB completes its insurance contracts project. The new requirements apply to companies that apply FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland, as the basis for their accounting.
“We are issuing FRS 103 to fill a gap in UK and Irish accounting standards for those entities applying FRS 102 that have insurance contracts,” Roger Marshall, an FRC board member and chair of the board’s Accounting Council, said in a news release. “We recognise that there are forthcoming changes to the regulatory framework for insurers, as well as ongoing work internationally on financial reporting for insurance contracts, and as a result we are allowing entities, generally, to continue with their existing accounting policies for the time being.”
—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine senior editor.