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Generally, IFRS 4 permitted companies to continue previous accounting practices for insurance contracts, but did enhance the disclosure requirements. [3] IFRS 4 defines an insurance contract as a "contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event ...
The accounting equation is a statement of equality between the debits and the credits. The rules of debit and credit depend on the nature of an account. For the purpose of the accounting equation approach, all the accounts are classified into the following five types: assets, capital, liabilities, revenues/incomes, or expenses/losses.
For a life insurer and a newly set up non-life insurer, even if profitable business is written, the value of the company may appear to worsen (when viewed from a regulatory basis, for example) because of new business strain.
A going concern is an accounting term for a business that is assumed will meet its financial obligations when they become due. It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the specified accounting period (the longer of the two).
In the U.S., state insurance departments examine (audit) insurance companies to evaluate many things, principally to see if the company is sound and policyholder interests are protected. A.M. Best is an example of an insurance rating agency who evaluates and rates many companies on various factors such as financial strength, claims-paying and ...
They are used to prepare the statutory financial statements of insurance companies. Statutory Accounting Principles are designed to assist state insurance departments in the regulation of the solvency of insurance companies. [1] Although there are minor state-by-state variations, they are the basis for state regulation throughout the United States.
Control Activities-the policies and procedures that help ensure management directives are carried out. Monitoring-processes used to assess the quality of internal control performance over time. The COSO definition relates to the aggregate control system of the organization, which is composed of many individual control procedures.
The accounting equation relates assets, liabilities, and owner's equity: Assets = Liabilities + Owner's Equity. The accounting equation is the mathematical structure of the balance sheet. Probably the most accepted accounting definition of liability is the one used by the International Accounting Standards Board (IASB). The following is a ...