Insurance Industry Developments -- 2012/13 Audit Risk Alert

The AICPA Audit Risk Alerts are developed to present issues that auditors may face in their current audits, focusing on emerging practice issues and current economic, accounting and auditing developments. Find out about important issues affecting the insurance industry and how these developments affect auditing in this industry. This alert also provides you with regulatory updates for the National Association of Insurance Commissioners (NAIC).

New accounting and auditing guidance and exposure drafts that are particularly significant to this alert and covered in just the right amount of detail include:

• FASB Accounting Standards Update No. 2010-26, and the related set of AICPA technical questions and answers on retrospective application
• NAIC Actuarial Guideline (AG) 38
• Update on the IASB and FASB Insurance Contracts Project
• Update on the IASB and FASB Revenue Recognition Project and applicability to insurance entities
• ASB clarity standards, including new format of auditor’s reports with an illustrative example for regulatory basis financial statements intended for general use

This alert also includes information on emerging issues such as:

• Audit and accounting considerations for the extended low interest rate environment
• Complex estimates and significant measurement uncertainty related to property and liability claims and claims expense
• Accounting for correction of an error under GAAP and SAP
• Opinions on supplemental schedules
• Pledged assets
• GAAP Disclosures on Statutory Basis Information

To comply with the professional standards, auditors need to understand the industry, regulatory, and other external factors that affect the entity and its environment. This helps you identify those factors and how they may be a source of risk. You’ll not only find targeted discussion of new developments and considerations, but also a look at what’s in the pipeline that may affect your engagements.

This Alert is intended to be used in conjunction with the Audit Risk Alert General Accounting and Auditing Developments—2012/13 (product no. ARAGEN12P), which explains important issues that affect all entities in all industries in the current economic climate. General topics include recently issued guidance and emerging audit risks resulting from external economic factors.

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