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Accounting rule creates ‘interpretation’ hurdles

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A new accounting standard for insurance contracts poses “numerous issues with interpretation”, the Insurance Council of Australia says.

Problems interpreting AASB 17 are stopping general insurers from accurately quantifying the financial impact and adjustments required to adopt the standard, it warns in a submission.

Feedback from council members indicates they expect to finish their assessments of financial implications over the next 18 months.

Treasury is consulting on AASB 17, issued by the Australian Accounting Standards Board. The standard aims to provide a consistent accounting treatment for health and general insurance contracts, and is based on the International Accounting Standards Board’s new IFRS 17 requirements.