The Financial Accounting Standards Board (FASB) has issued for public comment a proposal to improve accounting for insurance contracts.
This follows the International Accounting Standards Board (IASB) issuing its report on the same issue last week.
"The proposed standard is intended to bring greater consistency and relevance to the accounting for contracts that transfer significant risk between parties," said FASB chairman Leslie Seidman.
The proposal aims to improve financial reporting of insurance contracts, including measurement of insurance liabilities and the related effect on the statement of comprehensive income.
The FASB said they worked with the IASB on the joint insurance contracts project to improve existing US GAAP, and also work towards a "converged international standard".
However, the FASB said both proposals contain similar fundamentals, "most notably the use of current estimates? but differences exist".
One of the most significant changes in the FASB proposal is that the proposed update would require contracts that transfer significant insurance risk to be accounted for in a similar manner, regardless of the type of institution issuing the contract.
"In other words, the contractual features of the contract?not the type of insurer?would determine whether it is insurance.
Consequently, the proposed standard would apply to banks, guarantors, service providers and other types of insurers, in addition to insurance companies," the FASB explained.
Commenting on the proposal PwC US national professional services financial instruments co-leader Donald Doran said he expects the industry to have missed reviews on the proposal.
"Based on the number and nature of differences between the views expressed by the FASB and IASB during their deliberations, and the immediate need for an international standard, the boards may not achieve a converged standard."
Doran also raised concerns of increased income statement volatility as a result of the requirement to update assumptions each period.
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By GlobalDataStakeholders are asked to review and provide comment on the proposal by 25 October.
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