Document ID: chunk:federal_register_of_legislation:F2023L00015:reg:21:p99
Version: federal_register_of_legislation:F2023L00015
Segment Type: reg
Provision Reference: reg 21 (pt 99/101)
Character Range: 305740–308696

an objective in this limited circumstance. For the avoidance of doubt, the AASB also decided to prevent superannuation entities from applying AASB 17 through an amendment to AASB 1057 Application of Australian Accounting Standards.  Consequently, the AASB deleted a cross-reference to IAS 26 from paragraph 7(b) of AASB 17 instead of replacing it with a cross-reference to AASB 1056.

     BC344        The AASB also considered groups where the consolidated financial statements of a superannuation entity include an insurance subsidiary that applies AASB 17. On this matter the AASB noted that no significant issues were brought to its attention during the development of either AASB 1056 or AASB 17, nor since.

     BC345        Accordingly, the AASB decided to issue AASB 17 without any consequential amendments to the insurance requirements of AASB 1056.
[1] At the time of undertaking the public sector modification project, the NZASB had already issued PBE IFRS 17 for not-for-profit public benefit entities. However, this Standard was not regarded as applying to arrangements of public sector public benefit entities.
[2] IPSAS 42 does not require an entity that meets the criteria to apply the insurance approach – only that the entity is eligible to apply that approach.
[3] Because a deficiency is not represented by 'unearned premium' in the context of AASB 1023/PBE IFRS 4, the deficiency is separately recognised as an 'unexpired risk liability'.
[4] An entity with deferred acquisition costs and intangible assets related to insurance contracts would write those off before recognising any remaining deficiency [AASB 1023.9.1/PBE IFRS 4 (Appendix D.9.1)]; however, public sector entities do not ordinarily have material deferred acquisition costs or intangible assets.
[5] As noted in paragraphs BC3 and BC5, this is also generally the case for mutual entities in the private sector.
[6] The expected investment returns are ordinarily higher than the discount rates (for time value) applied to measure insurance liabilities.
[7] The IASB chose groups of contracts as a way of striking a compromise between accounting on an in individual contract basis (that would be particularly burdensome) and accounting at the portfolio level of aggregation [IFRS 17.BC123 & BC124].
[8] In that context, the Boards noted: paragraph 30(g) of the AASB Not-for-Profit Entity Standard-Setting Framework; and, to some extent, paragraph 62 of the New Zealand Accounting Standards Framework.
[9] The liability for incurred claims is also the focus of management attention for most public sector entities because their liabilities for incurred claims are usually much larger than their liabilities for remaining coverage.
[10] Calculated using the premium allocation approach, which public sector entities may choose to apply under AASB 17/PBE IFRS 17.
[11] This is the level at which the Liability Adequacy Test is currently applied under AASB 1023.9.1/PBE IFRS