Document ID: chunk:federal_register_of_legislation:F2023C00382:reg:66:p3
Version: federal_register_of_legislation:F2023C00382
Segment Type: reg
Provision Reference: reg 66 (pt 3/8)
Character Range: 316907–320162

NFP and public sector entities (including for-profit public sector entities) – see paragraphs AusBC23–AusBC30; and
            (e) RDR – see paragraphs AusBC31–AusBC32.
       Some of these issues have been resolved through the issue of AASB 17, others will be the subject of further due process (including in a forthcoming ED on Australian-specific issues arising from AASB 17), as noted where relevant below.

Implications for AASB 4, AASB 1023 and AASB 1038
AusBC6                  The AASB noted that adopting IFRS 17 would supersede AASB 4, AASB 1023 and AASB 1038 and therefore change current accounting requirements for insurance contracts.  The AASB acknowledged that doing so would improve financial reporting in some respects but not in other respects.
AusBC7                  Regarding the key aspects, the AASB noted that:
            (a) the main improvements include:
                 (i) greater clarity around the accounting for acquisition costs, particularly for general insurance; and
                 (ii) greater alignment with other industries of the basis for revenue recognition for insurance contracts with coverage periods greater than one year; and
            (b) the main areas not improved include:
                 (i) use of historical (inception-date) discount rates in accounting for the contractual service margin (CSM) under the 'general model';
                 (ii) use of 'coverage period' (rather than pattern of service provision) as the basis for recognising the CSM in profit over the contract life; and
                 (iii) the level of aggregation of contracts for accounting purposes.
AusBC8                  In weighing up these issues, the AASB also acknowledged the precedent it established when it decided not to adopt IAS 26 Accounting and Reporting by Retirement Benefit Plans in favour of retaining the Australian accounting requirements specified in AAS 25 Financial Reporting by Superannuation Plans.  This decision was subsequently reconfirmed when the AASB issued AASB 1056 to supersede AAS 25.
AusBC9                  In considering the facts and circumstances surrounding the AASB's decisions not to adopt IAS 26 (and thereby have an exception to its IFRS adoption policy), the AASB concluded that the legislative environment as well as tailored financial reporting requirements for superannuation entities (which were not adequately addressed in IAS 26) justified the need for a specific Australian pronouncement (see paragraphs BC7–BC11 of AASB 1056).  In contrast, overall, the AASB concluded that IFRS 17 represents a comprehensive, internationally consistent, set of financial reporting requirements for Australian insurers, despite the issues noted in paragraph AusBC7(b).
AusBC10               On balance, the AASB considered that the benefits arising from international harmonisation in relation to the accounting for insurance contracts, and the greater alignment of the basis for revenue recognition with other industries noted in paragraph AusBC7(a)(ii), outweighed the drawbacks noted in paragraph AusBC7(b).  Accordingly, the AASB decided to supersede AASB 4, AASB 1023 and AASB 1038 (and Interpretation 1047 – see paragraphs AusBC14–AusBC17) for for-profit private sector entities