Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p74
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 74/101)
Character Range: 235491–238628

the inherent characteristics or status they possess at a particular time.

          (c) Enforceable nature of arrangement: All respondents supported this indicator and many considered that it should rank above most of the other indicators, with some suggesting that it should be a pre-requisite for applying AASB 17/PBE IFRS 17. Many of these respondents considered that enforceability is essential to there being a contract, consistent with other AASB Standards applied in the public sector that relate to contracts on revenue recognition and leases.

          (d) Source and extent of funding: All respondents supported this indicator, including that the greater the extent of funding by the insured/beneficiary, the more likely it is an arrangement that would be suitable to be accounted for as giving rise to insurance contracts. Some respondents acknowledged that there is no particular tipping point in respect of the extent of funding. Some respondents considered that it is at least as relevant to focus on how an amount of funding is calculated, rather than only its source being, for example, general taxation and suggested an actuarially calculated appropriation could be indicative of insurance.

          (e) Management practices and assessing financial performance: Most respondents supported this indicator, but many considered that it should rank below most of the other indicators. Some respondents did not favour the indicator because they considered that most arrangements operated by government would be expected to possess this attribute to meet relevant governance standards. Some respondents considered that the focus should be on management practices more specific to the insurance industry, including underwriting and risk management.

          (f) Assets held to meet benefits: Most respondents supported this indicator, but many considered that it should rank below most of the other indicators. Some respondents did not favour the indicator because they considered that many compensation schemes operated by government hold assets to meet the expected benefit payments.

     BC244        Some respondents favoured a collective assessment of all the proposed indicators without ranking them. However, most respondents favoured ranking the indicators and/or identifying some indicators as pre-requisites, for a range of reasons, including on the basis that they considered it would:

          (a) tend to result in a greater level of consistency in application and, therefore, in more consistent outcomes;

          (b) make the assessment easier compared with the potential burden of making a collective assessment of six indicators.

     BC245        Those respondents who favoured ranking the indicators and/or identifying some indicators as pre-requisites had varied views on which of the indicators should be ranked most highly. However, balancing all the feedback received, the Boards noted that:

          (a) having an identifiable coverage period and the enforceable nature of an arrangement were generally regarded as the most crucial of the indicators;

          (b) the similarity of risks