FASB Issues an Exposure Draft to Improve the Accounting for Financial Guarantee Insurance Contracts.Proposal Is Written in New FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Format Designed to Enhance Understandability NORWALK Norwalk (nôr`wôk'). 1 City (1990 pop. 94,279), Los Angeles co., S Calif.; settled in the 1850s, inc. 1957. With the arrival (1875) of the Southern Pacific RR, it became a center for the dairy and logging industries, but , Conn. -- First graph, second sentence of release should read: The proposal, Accounting for Financial Guarantee Insurance Contracts an interpretation of FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 60...(sted The proposal, Accounting and Reporting by Insurance Enterprises an interpretation of FASB Statement No. 60...). The corrected release reads: FASB ISSUES AN EXPOSURE DRAFT TO IMPROVE THE ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS Proposal Is Written in New FASB Format Designed to Enhance Understandability The Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (FASB) today issued a proposal to improve the accounting for financial guarantee insurance contracts. The proposal, Accounting for Financial Guarantee Insurance Contracts an interpretation of FASB Statement No. 60, reduces diversity in practice and provides financial statement users with clearer, more comparable information and expanded disclosures. In keeping with the FASB's mission to help reduce complexity in the financial reporting system, today's proposal has been written in a new format intended to improve its understandability. Notable changes from formats used in previous Statements issued include the use of bold text at the beginning of each section to convey the accounting principle for that section and the inclusion of examples in the body of the standard to illustrate the proposed accounting guidance for certain paragraphs. Currently, there is diversity in the way financial guarantee insurance contracts are accounted for by insurance enterprises. That diversity has resulted in differences in the recognition and measurement of claim liabilities and can lead to different financial statement information for similar transactions. Today's exposure draft requires that insurance enterprises recognize premium revenue when insured contractual payments (generally principal and interest) are made by the issuer of the insured financial obligation. The proposal presumes that the risk to the insurance enterprise is reduced to the extent of the insured contractual payments made. The proposed Statement also: * Requires recognition of a claim liability prior to a default (insured event) under certain criteria criteria (krītēr´ē  ),n. * Requires more consistent claim liability measurement based on the present value of expected cash flows * Requires expanded disclosures about financial guarantee insurance contracts. "Today's proposal provides investors and other financial statement users with clearer, consistent, and more comparable information about financial guarantee insurance contracts," said Mark Trench trench: see ocean. , FASB project manager. "It would be effective for financial statements issued for fiscal years beginning after December December: see month. 15, 2007, and all interim periods within those fiscal years." Open Due Process The Board is seeking written comments on the proposal by June June: see month. 18, 2007. Parties interested in providing input on today's proposal should submit their comments by email to director@fasb.org See .org. (networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations. RFC 1591. , File Reference No. 1530-100. Those without email may send their comments to: Technical Director--File Reference No. 1530-100 Financial Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, Connecticut 06856-5116 About the Financial Accounting Standards Board Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants With over 330,525 CPA members (in August 2006), the American Institute of Certified Public Accountants (AICPA) is the largest professional organization of Certified Public Accountants (CPAs) in the United States of America. . Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together , and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org. |
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