Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p94
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 94/101)
Character Range: 291763–294799

required to:

          (a) classify the liability as a liability for incurred claims and apply AASB 17/PBE IFRS 17 when the entity has previously asserted explicitly that it regards the liability as an insurance liability; and

          (b) classify the liability as a provision and apply AASB 137/PBE IPSAS 19 when the entity has not previously asserted explicitly that it regards the liability as an insurance liability.

     The Boards noted that supportive feedback was received for the above transition provision, which was included in the Draft Standard of the amendments to AASB 17/PBE IFRS 17 (and, in the case of the AASB only, AASB 1050 Administered Items) issued in October 2022 for fatal flaw comment.

Non-distinct investment components

     BC322        The Boards noted that non-distinct investment components arise when, in all circumstances, there is a return of premium/levies from the insurer to the policyholder and that this can arise, for example, when the final amount of premiums/levies depends on the extent of claims. They noted that this sometimes arises for Workers' Compensation insurance, which is conducted by both private and public sector entities. The Boards considered whether there are any public sector specific reasons for modifying AASB 17/PBE IFRS 17 in accounting for non-distinct investment components.

     BC323        The Boards concluded that there is no need for public sector modifications in respect of non-distinct investment components on the basis that:

          (a) the nature of the non-distinct investment components that arise in the public sector appear to be no different from those that arise in the private sector; and

          (b) based on informal consultation with key stakeholders, the incidence of non-distinct investment components in the public sector is no more prevalent, and possibly less prevalent, than in the private sector.

Regulatory matters, including Government Finance Statistics (GFS) implications, raised in feedback on AASB ED 319

GFS-related matters

     BC324        Some respondents to AASB ED 319 raised the following GFS reporting issues:

          (a) possible scope differences between accounting practice and GFS, including that GFS refers to 'premiums' in respect of an 'insurance corporation', implying premiums are an essential feature of insurance, while AASB ED 319 referred to 'source and extent of funding' as one of six indicators; and

          (b) AASB 17 requires investment returns to be recognised, measured and presented separately, while GFS deems the income generated by the investment of reserves as an implicit premium supplement attributed to policyholders.

     BC325        The AASB identified that both the scope issue and investment returns issue can arise under the superseded AASB 1023/AASB 4 and concluded that these matters, at this stage, should be addressed through liaison between the AASB and the Australian Bureau of Statistics, rather than by modifying AASB 17. The AASB noted that a number of other