Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p83
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 83/101)
Character Range: 260880–263833

apply AASB 17 or AASB 137 regardless of whether the activities would fall within the scope of AASB 17 based on the pre-requisites, indicators and other considerations, which would avoid governments being forced to apply different forms of accounting at the entity and consolidated levels. Entities currently applying AASB 137 would not be at risk of having to change their reporting to applying AASB 17 and some entities currently applying AASB 1023 may change their reporting to apply AASB 137, rather than AASB 17. However, the AASB considered the principle that each entity should apply Standards based on its own perspective and circumstances, not those of its parent, and the free choice might be seen as inconsistent with this principle.

          (b) Approach 2: Require captive insurers to apply AASB 137, whether controlled or administered, which would avoid governments being forced to apply different forms of accounting at the entity and consolidated levels (unless applying AASB 17 met management reporting needs) and would remove any element of doubt about which Standards to apply. Entities currently applying AASB 1023 would be required to change their reporting to apply AASB 137, rather than AASB 17. It would help achieve consistent reporting of information about self-insurance activities across all forms of reporting. However, the AASB considered this approach may result in a loss of useful information, in particular disclosures about claims, and would be inconsistent with the principle that each entity applies Standards based on its own perspective and circumstances. In addition, it would force some entities to transition from insurance accounting under AASB 1023 to AASB 137, when transitioning to AASB 17 may be preferred for cost-benefit reasons.

          (c) Approach 3: Require captive insurers to apply AASB 17, whether insurance activities are controlled or administered. This is effectively the position proposed in AASB ED 319/NZASB ED 2022-3, which would avoid governments being forced to apply different forms of accounting at the entity and consolidated levels (unless applying AASB 137 met management reporting needs) and remove doubt about which Standards to apply. Entities currently applying AASB 137 would be required to change their reporting to apply AASB 17, but only when the activities would fall within the scope of AASB 17 based on the pre-requisites, indicators and other considerations. It would help achieve consistent reporting of information about self-insurance activities across all forms of reporting. However, the AASB noted constituent concerns about having some entities transition from accounting under AASB 137 to AASB 17, which would have cost implications.

          (d) Approach 4: No modifications to the application of AASB 17 when the activities would fall within the scope of AASB 17 based on the pre-requisites, indicators and other considerations when an entity controls the