Insurance Industry Developments Audit Risk Alert

Need to know the important issues affecting the insurance industry and how the current economic crisis affects this industry? This Audit Risk Alert focuses on emerging practice issues and current accounting and auditing developments. This alert also provides you with regulatory updates for statutory accounting.

Auditing in this challenging economic environment requires continually evaluating the importance of long-standing auditing standards directed at areas such as auditing fair value measurements, auditing accounting estimates, using the work of a specialist, going concern, and fraud—all of which get a fresh look in this alert. The current economic woes are stress testing the standards applicable to those areas and the critical thinking required to successfully apply them during the engagement.

The targeted discussions of recent economic, industry, technical, regulatory, and professional developments that may affect your audits will invigorate the audit team's brainstorming sessions required under AU sections 314 and 316 within the GAAS standards. Auditors, financial statement preparers, and management will find these same discussions helpful in identifying the significant risks that may result in the material misstatement of financial statements.

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 ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value.
• FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 (FASB ASC 105).
• FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R).
• FASB Statement No. 166, Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140.
• FASB Statement No. 165, Subsequent Events (FASB ASC 855-10).
• SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit
• SSAE No. 15, An Examination of an Entity's Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements

This alert also includes information on emerging issues such as:

• The FASB Accounting Standards Codification™
• Convergence with International Financial Reporting Standards (IFRS) and the IFRS Roadmap
• FASB and IASB's joint Insurance Contracts Project
• The ASB's Clarity Project including convergence with international auditing standards