Tentative Board Decisions
Tentative Board decisions are provided for those interested in
following the Board´s deliberations. All of the reported decisions are
tentative and may be changed at future Board meetings.
November 19, 2014 FASB Board Meeting
Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts.
The Board discussed alternative discount rates to reflect the time
value of money in the calculation of the liability for future policy
benefits.
Discount Rate
The Board decided that long-duration insurance contracts that are
discounted using an expected investment yield under existing GAAP should
be discounted using a rate based on a portfolio of high-quality
fixed-income investments.
Next Steps
At a future Board meeting, the Board will consider the application of
the discount rate to insurance contracts for which the liability for
future policy benefits is discounted using a rate other than an expected
investment yield under existing GAAP. It also will clarify the concept
of "high-quality," evaluate related disclosure requirements, and
continue to deliberate other targeted improvements to accounting for
long-duration contracts.
Conceptual Framework: Measurement.
The Board discussed a process for establishing standards for
determining changes in carrying amounts (remeasurements or subsequent
measurements). The Board directed the staff to continue developing the
concepts underlying that process.
Disclosure Framework: Board´s Decision Process. The Board discussed whether and, if so, how the discussion of materiality in FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, should be modified. The Board decided to:
- Change the description of materiality in Concepts Statement 8 to
explain that materiality is a legal concept that varies by
jurisdiction. Concepts Statement 8 will include the U.S. Supreme Court´s
description.
- Retain the notion that materiality is an entity-specific
judgment and that it is different from relevance, which is assessed by
the Board.