Own credit risk

The topic of own credit risk generates perhaps more strongly held views than any other accounting topic. For example, in around 2011, the IASB was developing a discussion paper on insurance contracts. Some of us visited one of the largest insurers in the world. They knew almost nothing about the project. But they had heard… Continue reading Own credit risk

Assumptions are not just a throw-away

The term ‘assumption’ figures prominently in some accounting standards, but can give the wrong impression. Where accounting standards refer to ‘assumptions’ The term appears in contexts where a preparer needs to make an accounting estimate. IAS defines accounting estimates as ‘monetary amounts in financial statements that are subject to measurement uncertainty’. Some IFRS standards use… Continue reading Assumptions are not just a throw-away

Does it matter that companies don’t consolidate pension funds?

Some people wonder why companies present pension liabilities net of the related plan assets. They suggest that instead companies should consolidate their pension plans. People making that suggestion think it would lead to companies presenting pension liabilities (gross) separately from the plan assets. This post explains why introducing a requirement to consolidate pension plans would… Continue reading Does it matter that companies don’t consolidate pension funds?

Discount rates for very long maturities

A common question about discount rates is how to estimate a discount rate for assets and liabilities with very long maturities. Such a discount rate contains a term premium that cannot be based on evidence and can never be back-tested. As a result, that term premium is not really an estimate, it is just a… Continue reading Discount rates for very long maturities

All disclosure requirements belong in one standard

Disclosure requirements in IFRS Standards are distributed throughout almost all of the standards. In my view, the IASB should consolidate all its disclosure requirements into one location in one standard. I explain that view in a comment letter I have submitted on the IASB’s exposure draft Disclosure Requirements in IFRS Standards—A Pilot Approach. My response… Continue reading All disclosure requirements belong in one standard