If you’re trying to keep up with changes in regulations, you may be feeling a bit dizzy just now. And if you’re trying to constantly process the changing standards, your vertigo may be compounded by the feeling that you’re out on a ledge(r). Have no fear.
While changes may be disorienting and may cause you to feel like you have a few too many plates in the air, they can all result in improved business operations — provided, of course, you manage to comply with all of them. That’s where we come in. Let’s start with the basics.
Upcoming US-GAAP Changes At a Glance
In an effort to improve financial reporting for insurance companies that issue long-duration contracts such as life insurance and annuities, the Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2018-12 (Topic 944). The object of the update is to simplify and enhance financial reporting with the following improvements:
- A more current measure of the insurance liability with regular updates for actual experience and future assumptions
- A more uniform, current, market-based measure of options or guarantees
- Simplified amortization of deferred acquisition costs that will be amortized on a constant-level basis over the expected contract life
- Enhanced disclosures.
While this may be great for those that use the financial statements, it presents yet another valuation methodology to be embraced by actuarial and accounting departments — on top of what is probably an already time-consuming, convoluted, and complex closing process.
Is it Time to Embrace Change?
With a compliance deadline of January 1, 2021, for companies that have a December 31 year-end and January 1, 2022, for companies with fiscal years ending mid-year, there may be no better time to relook at your processes and develop a more comprehensive and efficient subledger platform. The recently introduced SAP S/4HANA Financial Products Subledger (FPSL) could be an option. Read more here.
Ready When You Are
We can help you evaluate your current platform and implement a subledger that can easily comply with ASU 2018-12, and any other accounting standards and valuation methods you have. With years of global consulting experience, we’ve seen countless accounting changes and worked with all of them.
And given our experience with SAP’s S/4HANA Financial Products Subledger (FPSL) and its predecessor, Insurance Analyzer, we can help you create a roadmap to ensure your compliance with a ready-made solution. And we’ll help you be ready for the 2021 effective date, including the comparative data you need for 2020.
From specific regulations to multi-valuation reporting, we’re ready to help you be ready.
For more information on financial products subledger click here.
