Explanatory Statement
Accounting Standard AASB 2013-2
Amendments to AASB 1038 – Regulatory Capital
November 2013
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2013-2
AASB 2013-2 Amendments to AASB 1038 – Regulatory Capital makes amendments to Australian Accounting Standard AASB 1038 Life Insurance Contracts.
These amendments arise as a consequence of changes to the Australian Prudential Regulation Authority’s (APRA) reporting requirements relating to life insurers.
Main Features of AASB 2013-2
AASB 2013-2 makes amendments to AASB 1038 as a consequence of changes to the APRA’s reporting requirements relating to life insurers, particularly Prudential Standard LPS 110 Capital Adequacy, applicable from January 2013. Primarily, the amendments align terminology by changing references to ‘solvency’ in AASB 1038 to ‘capital’ and remove a related explanatory paragraph.
Application Date
This Standard applies to annual reporting periods ending on or after 31 March 2013. Early application is permitted for annual reporting periods ending on or after 1 January 2013 but before 31 March 2013.
Consultation Prior to Issuing this Standard
Given that the amendments to AASB 1038 arise from a change to the terminology used by the prudential regulator APRA, they have only a limited impact on financial reporting. Accordingly, rather than undertake broad outreach, the AASB conducted targeted outreach with industry participants to confirm that the amendments to AASB 1038 are appropriate to achieve the purpose of aligning requirements with the changed prudential regulations. The industry participants consulted, via telephone and email, included representatives of APRA, financial statement preparers in the life insurance industry and members of the accounting profession involved in the life insurance industry.
Feedback received from the targeted outreach indicated support for the changes in the amendment. No substantial changes were made to the amendment as a result of the outreach performed.
A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2013-2 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2013-2
Amendments to AASB 1038 – Regulatory Capital
Overview of the Accounting Standard
AASB 2013-2 makes amendments to AASB 1038 Life Insurance Contracts as a consequence of changes to the Australian Prudential Regulation Authority’s reporting requirements relating to life insurers, particularly Prudential Standard LPS 110 Capital Adequacy, applicable from January 2013. Primarily, the amendments align terminology by changing references to ‘solvency’ in AASB 1038 to ‘capital’ and remove a related explanatory paragraph.
Human Rights Implications
This Standard is issued by the AASB in furtherance of the objective of facilitating the Australian economy. It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.
Conclusion
This Standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.