Life and Health Insurance Entities — AICPA Audit and Accounting Guide

Publisher: AICPA

Availability: In Stock

Description

Table of Contents

Excerpts

Reviews

Description

Ready to fast track your knowledge of the auditing and accounting issues significant to the insurance industry? Whether you're preparing your company's financial statements or preparing for an auditing engagement in the insurance industry, this Audit and Accounting Guide provides you with the latest information on accounting and auditing issues affecting the insurance industry and related financial statement considerations.

Have you used the FASB Accounting Standards Codification™ (ASC) to maneuver through the new structure of GAAP? You'll find the helpful guidance you're accustomed to now fully conformed to the ASC, along with a clear explanation of the ASC's significance to the profession, numerical referencing system, and Internet-based research system.

Updated with conforming changes as of May 1, 2009, the guide includes relevant guidance contained in official pronouncements issued through that date, supplemented with specific "how-to" recommendations. The following new pronouncements are particularly significant to this guide and have been reflected in this edition:

FASB Statement No. 163, Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60.

FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles

FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.

FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51

FASB Statement No. 141(revised), Business Combinations.

SSAE No. 15, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements

SSARS No. 17, Omnibus Statement on Standards for Accounting and Review Services—2008SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit

National Association of Insurance Commissioners (NAIC) Statement of Statutory Accounting Principles (SSAP) No. 99, Accounting for Certain Securities Subsequent to an Other-Than-Temporary Impairment.

SSAP No. 98, Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, An Amendment to SSAP 43-Loan-Backed and Structured Securities

You'll also want to check out the new developments related to the heavily debated fair value issue addressed in FASB Statement No. 157, Fair Value Measurements. With all these must-have features, this guide is an essential reference for firms, small practitioners, and professionals in business and industry.

For a topical listing of subject matter by chapter, click on the Table of Contents tab.

See full description

Chapter 1: Overview of the Life and Health Insurance Industry
- Introduction
- Legal Forms of Organization
- Size and Composition of the Industry
  - Stock Insurance Entities
  - Mutual Insurance Entities
  - Fraternal Benefit Societies
  - Assessment Entities
- Operations and Distribution Systems
  - Operations
  - Distribution Systems
- Major Lines of Business
  - Life Insurance Contracts
  - Accident and Health Insurance Contracts
  - Annuity Contracts
  - Investment Contracts
  - Fee-for-Service Contracts
- Reinsurance
- Regulation
  - National Association of Insurance Commissioners
  - Federal Regulations
- Rating Agencies
- Taxation
  - Federal Taxation
  - State Taxation
- State Guaranty Funds
- Industry Associations
- International Considerations
- Terrorism
Chapter 2: Characteristics of Life and Health Insurance Products
- Introduction
- Classification of Insurance Contracts
  - Broad Lines of Business
  - Participating or Nonparticipating Classification
  - Group or Individual Classification
  - Accounting Classification
- Types of Contracts
  - Life Insurance Contracts
  - Accident and Health Insurance Contracts
  - Annuity Contracts
  - Investment Contracts
  - Fee-for-Service Contracts
Chapter 3: Sources of Accounting Principles and Reporting Requirements
- Introduction
- Statutory Accounting Practices
  - Permitted Statutory Accounting Practices
  - Statutory Reporting
  - Disclosure Issues
- GAAP Financial Statement Disclosures
  - Certain Financial Statement Disclosures
  - Risks and Uncertainties
  - Mutual Life Insurance Entities
- FASB ASC 820 and 825 Fair Value Measurements and Disclosures and Financial Instruments
  - Definition of Fair Value
  - Valuation Techniques
  - Present Value Techniques
  - The Fair Value Hierarchy
  - Disclosures
  - Fair Value Option
- Securities and Exchange Commission Reporting Requirements
- Tax Basis Accounting Requirements
- Comparison of Generally Accepted Accounting Principles and Statutory Accounting Practices
Chapter 4: Audit Risk Considerations
- Introduction
- Risk Indicators in the Life and Health Insurance Industry
  - Asset Risk (C-1)
  - Insurance Risk (C-2)
  - Interest Rate Risk (C-3)
  - Business Risk (C-4)
- Statutory Risk Based Capital
Chapter 5: General Auditing Considerations
- Introduction
- Scope of the Audit Engagement
  - General Considerations
  - PCAOB Integrated Audit of Financial Statements and Internal Control Over Financial Reporting
  - PCAOB Audit of Financial Statements Only
- Planning and Other Auditing Considerations
  - Audit Planning
  - Audit Risk
  - Planning Materiality
  - Use of Service Organizations
- Use of Assertions in Obtaining Audit Evidence
- Understanding the Entity, Its Environment, and Its Internal Control
  - Risk Assessment Procedures
  - Discussion Among the Audit Team
  - Understanding of the Entity and Its Environment
  - Understanding of Internal Control
- Assessment of Risks of Material Misstatement and the Design of Further Audit Procedures
  - Assessing the Risks of Material Misstatement
  - Designing and Performing Further Audit Procedures
- Evaluating Misstatements
- Additional Audit Considerations
  - Analytical Procedures
  - Accounting Estimates
  - Use of Specialists
  - Use of Internal Auditors
  - Audit Reports
  - Audit Documentation—Audits Conducted in Accordance With GAAS
  - Audit Documentation—Audits Conducted in Accordance With PCAOB Standards
  - Auditing Fair Value Measurements and Disclosures
  - Letters for State Insurance Regulators to Comply With the NAIC Model Audit Rule
  - SEC Requirements for Management's Report on Internal Control Over Financial Reporting
  - Other Communication Between Auditors and Regulators
  - Communications by Successor Auditors
  - Communication of Matters Related to Internal Control
  - Communication of Other Matters With Those Charged With Governance, Including Audit Committees
  - Consideration of Fraud in a Financial Statement Audit
  - Illegal Acts
  - Going-Concern Considerations
  - Management Representations
Chapter 6: Auditing Inforce Files
- Introduction
  - Control Objectives
  - Auditing Procedures
  - Confirmation of Insurance Contracts in Force
Chapter 7: Insurance Revenues
- Introduction
- Regulation of Premium Rates
- Taxation of Premiums
- Accounting Practices
- Statutory Accounting Practices
- Generally Accepted Accounting Principles
- Auditing
- Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Premium Transactions
- Control Environment
- Control Activities
- Information and Communication
- Audit Consideration Chart
Chapter 8: Liabilities for Future Policy Benefits (Statutory Policy Reserves) and Other Contract Liabilities
- Introduction
- Regulation
  - Statement of Actuarial Opinion
- Calculation Methods
- Reserve Definitions
  - Retrospective and Prospective Methods
- Accounting Practices
- Statutory Accounting Practices
  - Calculation of Reserve Liabilities by Contract Type
  - Participating Policies
- Generally Accepted Accounting Principles
  - Significant Actuarial Assumptions
  - Calculation of Liabilities for Future Policy Benefits by Contract Type
  - Participating Dividends
- Auditing
  - Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Auditing Liabilities for Future Policy Benefits and Other Contract Liabilities
  - Control Environment
  - Control Activities
  - Information and Communication
- Special Considerations
  - Auditing Statutory Reserve Adequacy
  - Auditing GAAP Benefit Liabilities—Reviewing Assumptions Used
- Audit Consideration Chart
Chapter 9: Benefit and Claim Payments
- Introduction
  - Kinds of Benefit and Claim Payments
- Regulation
- Accounting Practices
  - Statutory Accounting Practices—Benefit and Claim Payments
  - Generally Accepted Accounting Principles—Benefit and Claim Payments
- Auditing
  - Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Contract Benefit and Claim Transactions
  - Control Environment
  - Control Activities
  - Information and Communication
- Audit Consideration Chart
Chapter 10: Commissions, General Expenses, and Deferred Acquisition Costs
- Introduction
- Regulation
- Accounting Practices
  - Statutory Accounting Practices
  - Generally Accepted Accounting Principles
  - Accounting for DAC in Connection With Contract Modifications or Exchanges
  - Sales Inducements to Contract Holders
  - Amortization of DAC
  - Calculation Methodologies
  - Recoverability Testing and Loss Recognition
  - Special Considerations
- Auditing
  - Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Commissions, General Expenses, and Deferred Acquisition Costs
  - Control Environment
  - Control Activities
  - Information and Communication
  - Commissions and Allowances
  - General Expenses
  - Deferred Acquisition Costs
- Audit Consideration Chart
Chapter 11: Investments
- Introduction
- Regulation
- Accounting Practices
- Security Investments
  - Debt Securities
  - Securities Lending Transactions
  - Repurchase Agreements and Wash Sales
  - Equity Securities
  - Futures, Options, and Similar Financial Instruments
  - Interest Maintenance Reserve and Asset Valuation Reserve
  - Realized and Unrealized Gains and Losses on Debt and Equity Securities
- Investments Other Than Securities
  - Mortgage Loans
  - Troubled Debt Restructurings
  - Real Estate Investments
  - Joint Ventures and Partnerships
  - Policy Loans
- Investment Income Due and Accrued
- Auditing
  - Debt and Equity Securities
  - Inherent Risk
- Obtaining an Understanding of Internal Control for Investment Transactions
  - Control Environment
  - Control Activities
  - Information and Communication
- Audit Consideration Chart
Chapter 12: Reinsurance
- Introduction
- Reinsurance Transactions
- Types of Reinsurance Entities
- Bases of Reinsurance Agreements
  - General Reinsurance Agreements
- Regulation
- Accounting Practices
  - Statutory Accounting Practices
  - Generally Accepted Accounting Principles
  - Reporting Reinsurance Assets and Liabilities
  - Reporting Reinsurance Revenues and Costs
- Auditing
  - Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Reinsurance Transactions
  - Control Environment
  - Control Activities
  - Information and Communications
  - Reinsurance Ceded
  - Planning Substantive Tests of Reinsurance Ceded
  - Reinsurance Assumed
  - Planning Substantive Tests of Reinsurance Assumed
- Audit Consideration Chart: Reinsurance Transactions in General
Chapter 13: Taxation of Life Insurance Entities
- Introduction
  - Federal Income Taxes
- Election to File a Consolidated Return
  - Five Year Affiliation Requirement
- Elements of Life Insurance Company Taxable Income
  - Life Insurance Gross Income
  - Life Insurance Company Deductions Allowed
  - Adjustments Unique to Life Insurance Companies
  - Computation of Federal Income Tax Liability
  - State Taxes
- Accounting Practices
  - Statutory Accounting Practices
- Auditing
  - Inherent Risk Factors
- Obtaining an Understanding of Internal Control for Auditing Income Tax Transactions
  - Control Environment
  - Control Activities
  - Information and Communication
- Audit Consideration Chart
Chapter 14: Other Assets and Liabilities, Lending and Financing, Surplus Notes, Separate Accounts, Insurance Related Assessments and Equity—Contract Holders' Surplus
- Introduction
- Other Assets
  - Nonadmitted Assets, Statutory Financial Statements Only
- Other Liabilities
- Lending and Financing
- Surplus Notes
- Separate Accounts
  - Variable Annuity Contracts and Variable Life Insurance Contracts
  - Separate Account Structures
  - Group Annuity Contracts
  - Statutory Accounting Practices—Separate Accounts
  - Generally Accepted Accounting Principles— Separate Accounts
  - SEC Registration—Separate Accounts
  - Additional Literature—Separate Accounts
- Insurance Related Assessments
  - Guaranty Fund Assessments
  - Other Insurance Related Assessments
  - Reporting Liabilities
  - Application of Guidance
  - Present Value
  - Reporting Assets for Premium Tax Offsets and Policy Surcharges
  - Pensions
- Equity Contract Holders' Surplus
  - Statutory Accounting Practices—Capital and Surplus
- Auditing
  - Auditing Procedures
Chapter 15: Reports on Audited Financial Statements
- Reports on Financial Statements
- Unqualified Opinions on GAAP Financial Statements
- Mutual Life Insurance Entities
- Unqualified Opinions With Explanatory Language
  - Emphasis of a Matter
  - Uncertainties
  - Going Concern
  - Evaluating Consistency of Financial Statements
- Qualified Opinion
- Disclaimer of Opinion
- Adverse Opinion
- Additional Guidance When Performing Integrated Audits of Financial Statements and Internal Control Over Financial Reporting
- Reporting on Whether a Previously Reported Material Weakness Continues to Exist
- Auditors' Reports on Statutory Financial Statements of Insurance Entities
  - NAIC-Codified Statutory Accounting
- General Use Reports
- Limited Use Reports
- General Use and Limited Use Reports
  - Reporting on Management's Assessment Pursuant to the Life Insurance Ethical Market Conduct Program of the Insurance Marketplace Standards Association
  - Overview of the IMSA Life Insurance Ethical Market Conduct Program
  - IMSA Assessment Questionnaire
  - Insurance Marketplace Standards Association Membership and Certification Process
  - IMSA Independent Assessor Application Process and Required Training
  - IMSA Assessment Handbook
  - Planning the IMSA Engagement
  - Establishing an Understanding With the Client
  - Assessments of Attestation Risk
  - Obtaining Sufficient Evidence
  - Reporting Considerations for IMSA Engagements
  - Elements of the Report
  - Assessment of Attestation Risk for IMSA Engagements
  - Management Characteristics and Influence Over the Control Environment
  - Industry Conditions
  - Distribution, Sales Volume, and Products
  - Other Considerations
Appendix A: List of Industry Trade and Professional Associations, Directories, and Journals
Appendix B: Illustrative Financial Statements
Appendix C: Life Insurance Entity Specific Disclosures
Appendix D: Major Existing Differences Between AICPA Standards and PCAOB Standards
Appendix E: Schedule of Changes Made to the Text From the Previous Edition
Glossary

012639

Excerpts

Introduction

I-1. This guide has been written with the assumption that readers are proficient in accounting and auditing in general but unfamiliar with the life and health insurance industries (hereinafter referred to as the life insurance industry or life insurance entities). Accordingly, the guide includes extensive life insurance industry background and explanatory material.

I-2. Chapters 1-5 provide background information and terminology that is intended to help the reader to better understand the industry. They also include comprehensive discussions of the life insurance business, product characteristics, and general auditing considerations and accounting practices—both statutory accounting practices (SAP) and generally accepted accounting principles (GAAP)—unique to the insurance industry.

I-3. Chapters 6-14 focus on the major financial statement components that have unique accounting or auditing requirements for life insurance entities. The organization of chapters 6-14 is as follows:

•

Introductory material

•

Regulatory matters

•

General descriptions of accounting practices, both SAP and GAAP

•

Discussion of the auditor's understanding of internal control, including the following:

•	Understanding of the control environment

•	Assessment of the risks of material misstatement

•	Examples of control activities

•	Description of the related information system

•	Description of special audit considerations, if any

•	Charts of audit considerations with examples of specific audit objectives and control and auditing procedures

I-4. Chapter 6 emphasizes the significance of the inforce files in the audit of a life insurance entity, and contains descriptions of control and audit procedures for inforce files. Chapters 7-14 concentrate on the major transaction cycles of a life insurance entity. Chapter 15 discusses reports.

012639

Subscription Info

Paperback 2009

Product# 012639

Availability: In Stock

Standing Order Option*

*Discounted price reflected in Shopping Cart

(What is the Standing Order Option?)

Regular:$75.00

AICPA Member:$60.00

Your Price:$75.00

QTY:

To receive your AICPA member discount, Sign In now, or Register using your AICPA membership number.

Customer Service

Current Published Version : 3110
© 2001-2010 CPA2Biz, Inc. All Rights Reserved.
CPA2Biz and the CPA2Biz logo are trademarks and service marks of CPA2Biz, Inc.
100 Broadway 6th Floor, New York, NY 10005
All other trademarks are the property of their respective owners.
To place an order by phone or for other assistance, please call 1-888-777-7077.