Audit and Accounting Guide: Property and Liability Insurance Entities 2018

Aicpa (Autor)

Buch | Softcover

688 Seiten

2019 | 2nd edition
John Wiley & Sons Inc (Verlag)
978-1-945498-52-7 (ISBN)

Infos

Get authoritative accounting and auditing guidance. Educate staff on the property and liability insurance industry, its products and regulatory issues, and the related transaction cycles an insurance entity is involved with. This guide contains updates on current GAAP and statutory accounting and audit guidance, as well as relevant guidance contained in standards issued through September 1, 2018 which have a major impact on insurance entities, including:



FASB ASU No. 2016-01 and AICPA Q&A Section 7100.15: Insurance Companies and the Definition of Public Business Entity
Revenue Recognition Implementation Issue: Considerations for Applying the Scope Exception in FASB ASC 606-10-15-2 and 606-10-15-4 to Contracts Within the Scope of FASB ASC 944

Autor

Founded in 1887, the American Institute of Certified Public Accountants (AICPA) represents the CPA and accounting profession nationally and globally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the accounting profession's technical and ethical standards. The AICPA's founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.

Inhalt

1 Nature, Conduct, and Regulation of the Business 01-113

General Nature of the Business 01-03

Kinds of Insurance 04-08

Legal Forms of Organization 09

Methods of Producing Business 10-17

Major Transaction Cycles 18-41

Underwriting of Risks 18-27

Pooling, Captives, and Syndicates 28-30

Processing and Payment of Claims 31-32

Investments 33-36

Definition of Public Business Entity 37-41

Revenue Recognition 42

Accounting Practices 43-113

State Insurance Regulation 43-51

National Association of Insurance Commissioners 52-53

Federal Regulation — Securities and Exchange Commission 54-59

Federal Regulation — The Dodd-Frank Wall Street Reform and Consumer Protection Act 60-70

Federal Regulation — Terrorism 71-75

Industry Associations 76

Statutory Accounting Practices 77-104

Generally Accepted Accounting Principles 105-112

Comparison of SAP and GAAP 113

2 Audit Considerations 01-188

Introduction 01

Scope of the Audit Engagement 02-15

General Considerations 02-04

Integrated Audit of Financial Statements and Internal Control Over Financial Reporting 05-10

Additional PCAOB Audit Standards 11-15

Planning and Other Auditing Considerations 16-75

Audit Planning 17-18

Audit Risk 19-23

Risk Assessment Procedures 24-29

Understanding the Entity, Its Environment, and Its Internal Control 30-49

Common Industry Ratios and Performance Metrics 50-62

Identifying and Assessing the Risks of Material Misstatement 63-66

2 Audit Considerations Performing Audit Procedures in Response to Assessed Risks 67-73

Use of Assertions in Obtaining Audit Evidence 74-75

Other Risk Assessment Activities and Considerations 76-80

Planning Materiality 76-78

Performance Materiality and Tolerable Misstatement 79-80

Consideration of Fraud in a Financial Statement Audit 81-82

Insurance Industry — Fraud Risk Factors 83-105

The Importance of Exercising Professional Skepticism 85

Discussion Among Engagement Personnel Regarding the Risks of Material Misstatement Due to Fraud 86-89

Obtaining the Information Needed to Identify the Risks of Material Misstatement Due to Fraud 90-91

Identifying Risks That May Result in a Material Misstatement Due to Fraud 92-96

Assessing the Identified Risks After Taking an Evaluation of the Entity’s Programs and Controls That Address the Risks Into Account 97-98

Responding to the Results of the Assessment 99

Evaluating Audit Evidence 100

Responding to Misstatements That May Be the Result of Fraud 101-102

Communicating About Possible Fraud to Management, Those Charged With Governance, and Others 103-104

Documentation and Guidance 105

Use of Information Technology 106-109

Going Concern Considerations 110-118

Evaluating Misstatements 119-122

Audit Documentation 123-131

Consideration of the Work of Internal Auditors 130-131

Communication of Matters Related to Internal Control 132-139

Identification of Deficiencies in Internal Control 133-134

Communication of Deficiencies in Internal Control 135-139

Communication of Other Matters With Those Charged With Governance 140-144

Matters to Be Communicated 142-144

Communications by Successor Auditors 145

Auditor Independence 146-147

Auditing Fair Value Measurements and Disclosures 148-150

Considerations for Auditors to Comply With the NAIC

Model Audit Rule 151-172

Awareness 152-153

Change in Auditor 154

Auditor’s Letter of Qualifications 155

Qualifications of the Auditor 156

2 Audit Considerations

Indemnification 157

Partner Rotation 158

Prohibited Services 159-161

Consideration of Internal Controls in a Financial Statement Audit 162

Notification of Adverse Financial Condition 163-164

Report on Internal Controls 165-167

Working Papers 168

Communications to Audit Committees 169

Management’s Report on Internal Controls Over Financial Reporting 170-172

Auditor’s Consideration of State Regulatory Examinations 173-177

Auditor’s Consideration of Permitted Statutory Accounting Practices 178-182

SEC Requirements for Management’s Report on Internal Control Over Financial Reporting 183-188

3 Premiums 01-132

Background 01-29

Types of Premiums Adjustments 04

Summary of Premium Transaction Flow 05-26

Involuntary Markets 27-29

Accounting for Premiums and Acquisition Cost 30-110

Premium Revenue and Premium Adjustments 30-49

Premium Receivable 50-55

Acquisition Costs 56-83

Premium Deficiencies 84-97

Medicare Part D 98-102

Accounting for Contracts That Do Not Transfer Insurance Risk 103-104

Disclosure Considerations 105-110

Auditing Premiums and Acquisition Costs 111-132

Audit Planning 111

Consideration of Fraud in a Financial Statement Audit 112

Audit Risk Factors — Premiums and DAC 113-116

Management Estimates 117-119

Risk of Material Misstatement — Inherent Risk Factors 120-121

Internal Control 122-124

Control Environment 125-126

Risk Assessment Process 127-128

Control Activities 129

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 130-131

Audit Consideration Chart 132

4 The Loss Reserving and Claims Cycle 01-204

Introduction 01-02

Types of Businesses and Their Effect on the Estimation Process 03-14

Policy Duration 04

Type of Coverage 05

Kind of Insurance Underwritten: Line of Business or Type of Risk 06-14

The Transaction Cycle 15-32

Claim Acceptance and Processing 16-18

Claim Adjustment and Estimation 19-24

Claim Settlement 25-28

Reinsurance Recoverable 29-30

Salvage and Subrogation 31-32

Components of Loss Reserves 33

Estimating Methods 34-53

Illustrative Projection Data 44-53

LAE Reserves 54-62

DCC Reserve Calculation Approaches 56-59

AO Reserve Calculation Approaches 60-62

Changes in the Environment 63-66

Critical Accounting Policies and Estimates Disclosure 67-68

Use of Specialists by Management in Determining Loss

Reserves 69-71

Guaranty Fund and Other Assessments 72

Accounting Principles 73-95

GAAP Accounting 73-74

Discounting Loss Reserves 75-82

Structured Settlements 83-85

Reinsurance Recoverables 86

Liability for Unpaid Claims and Claim Adjustment

Expenses 87-88

Statutory Accounting 89-95

Disclosures of Certain Matters in the Financial Statements of Insurance Enterprises 96-112

Applicability to Statutory Financial Statements 96

Relationship to Other Pronouncements 97-112

Auditing Loss Reserves 113-204

Planning Considerations — Overview 113-118

Consideration of Fraud in a Financial Statement Audit 119-121

Risk of Material Misstatement — Inherent Risk Factors 122

Internal Control 123-125

Control Environment 126

The Entity’s Risk Assessment Process 127-128

Information Systems 129

4 The Loss Reserving and Claims Cycle Control Activities 130-131

Identifying and Assessing the Risks of Material Misstatement 132

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 133-141

Use of Loss Reserve Specialists 142

Loss Reserve Specialists Engaged by the Auditor 143-145

Use of Management Specialists by Auditors in Evaluating Loss Reserves 146-148

Auditor’s Response to Management’s Use or Non-Use of a Loss Reserve Specialist 149

Evaluating the Reasonableness of the Estimates 150

Analytical Procedures 151-156

Testing the Data, Assumptions, and Selection of the Estimate 157-161

Auditing the Underlying Data Used in the Loss Reserving  Process 162-167

Develop a Point Estimate or Range to Evaluate Management’s Estimate 168-169

Loss Reserve Ranges 170-176

Factors That Could Affect a Range of Reasonably Possible Outcomes 177-183

Evaluating the Financial Effect of a Reserve Range 184-192

Auditor Uncertainty About the Reasonableness of Management’s Estimate and Reporting Implications 193-194

Evaluating the Reasonableness of Loss Adjustment Expense Reserves 195-196

Ceded Reinsurance Recoverable 197-202

Understanding the Impacts of Foreign Exchange 203

Audit Consideration Chart 204

5 Investments and Fair Value Considerations 01-251

Introduction 01-08

Overview 01

Investment Evaluation 02-03

Recordkeeping and Key Performance Indicators 04-05

The Transaction Cycle 06-07

Safekeeping 08

Regulation 09-14

Statutory Limitations 10-14

FASB Accounting Standards Codification 820 and 825 15-40

Definition of Fair Value 16-22

Application to Liabilities and Instruments Classified in a Reporting Entity’s Shareholders’ Equity 23-25

The Fair Value Hierarchy 26-30

Fair Value Determination When the Volume or Level of Activity Has Significantly Decreased 31-33

5 Investments and Fair Value Considerations Disclosures 34-35

Fair Value Option 36-38

Statutory Accounting 39-40

Accounting Practices 41-224

Significant Differences Between GAAP and Statutory Accounting 42

Cash and Cash Equivalents 43-50

Debt and Equity Securities 51-99

Mortgage Loans 100-114

Troubled Debt Restructurings 115-123

Real Estate 124-134

Derivatives, Including Futures, Options, and Similar

Financial Instruments 135-149

Joint Ventures and Partnerships 150-166

Investments in SCA Entities 167-182

Investment Income Due and Accrued 183-188

Asset Transfers and Extinguishments of Liabilities 189-202

Repurchase Agreements 203-215

Securities Lending 216-223

Other Information 224

Auditing Investments 225-251

Audit Planning 225

Consideration of Fraud in a Financial Statement Audit 226

Audit Risk Factors — Investments 227-230

Risk of Material Misstatement — Inherent Risk 231-233

Internal Control 234-236

Control Environment 237

Risk Assessment Process 238-239

Information System 240-241

Control Activities 242

Service Organizations 243-246

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 247-248

Group Audit Considerations for Investments in Alternative Investments and Subsidiary, Controlled and Affiliated Entities 249

Audit Consideration Chart and Procedures 250-251

6 Reinsurance 01-119

Types of Reinsurance 07-08

Reinsurance Contracts 09-19

Bases of Reinsurance Transactions 15-18

Frequently Used Terms in Reinsurance Contracts 19

Accounting Practices 20-81

6 Reinsurance Generally Accepted Accounting Principles Accounting Practices 20-75

Statutory Accounting Principles 76-81

Special Risk Considerations 82-86

Auditing Reinsurance 87-119

Audit Planning 87

Consideration of Fraud in a Financial Statement Audit 88

Audit Risk Factors — Reinsurance 89-91

Risk of Material Misstatement — Inherent Risk 92

Internal Control 93-94

Control Environment 95

Risk Assessment Process 96-97

Information and Communication 98-99

Control Activities 100

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 101-102

Internal Control of the Ceding Entity 103-104

Internal Control of the Reinsurer 105-106

Auditing Procedures for the Ceding Entity 107-109

Auditing Procedures for the Assuming Entity 110-113

Pools, Associations, and Syndicates 114

Reinsurance Intermediaries 115-118

Audit Consideration Chart 119

7 Income Taxes 01-67

Introduction 01-02

GAAP Accounting for Income Taxes 03-42

Basic Principles of GAAP Accounting for Income Taxes 05-26

Disclosure Requirements Contained in GAAP Literature 27-42

Statutory Accounting for Income Taxes 43-51

Disclosure Requirements Contained in Statutory Literature 51

Changes in Tax Law 52

Auditing Income Taxes 53-67

Audit Planning 53

Consideration of Fraud in a Financial Statement Audit 54

Audit Risk Factors — Income Taxes 55-57

Risk of Material Misstatement — Inherent Risk 58

Internal Control 59-60

Control Environment 61

Risk Assessment Process 62-63

Control Activities 64

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 65-66

Audit Consideration Chart 67

8 Insurance-Related Expenses, Taxes, and Assessments 01-93

Introduction 01-05

Premium and State Taxes 06-12

Guaranty Fund and Other Assessments 13-66

Generally Accepted Accounting Principles 19-22

Statutory Accounting Principles 23-30

The Patient Protection and Affordable Care Act 31-66

Capitalized Costs and Certain Nonadmitted Assets 67-71

Pensions 72-75

Audit Considerations 76-93

Audit Planning 76

Consideration of Fraud in a Financial Statement Audit 77

Audit Risk Factors 78-80

Internal Control 81-83

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 84-93

9 Captive Insurance Entities 01-41

Introduction 01-06

Types of Captive Organizations 07-26

Captive Operations 27-29

Specific Transaction Considerations and Accounting Principles 30-33

Taxes 33

Audit Considerations 34-41

Audit Planning 34

Consideration of Fraud in a Financial Statement Audit 35

Audit Risk Factors 36-38

Internal Control 39-40

Audit Procedures Responsive to the Assessed Risks of Material Misstatement 41

10 Reports on Audited Financial Statements 01-82

Reports on Financial Statements 01-02

Unmodified Opinions on GAAP Financial Statements 03-05

Modified Opinions 06-26

Qualified Opinion 10-11

Disclaimer of Opinion 12-14

Adverse Opinion 15-17

Emphasis-of-Matter Paragraphs 18-25

Evaluating Consistency of Financial Statements 26

Additional Guidance When Performing Integrated Audits of Financial Statements and Internal Control Over Financial Reporting 27-31

Integrated Audits Performed in Accordance With GAAS 27

10 Reports on Audited Financial Statements Considerations for Audits Performed in Accordance With PCAOB Standards 28-30

Reporting on Whether a Previously Reported Material Weakness Continues to Exist 31

Auditors’ Reports on Statutory Financial Statements of Insurance Entities 32-51

NAIC — Codified Statutory Accounting 33-35

Regulatory Basis Financial Statements Intended for General Use 36-40

Regulatory Basis Financial Statements Intended for Limited Use 41-45

Regulatory Basis Financial Statements — Other Issues 46-51

Correction of Error 52-57

Correction of an Error — Regulatory Basis Financial Statements Intended for General Use 56

Correction of an Error — Regulatory Basis Financial Statements Intended for Limited Use 57

Opinion on Supplemental Schedules 58- 64

Other Reports 65-82

Accountant’s Awareness Letter 66-68

Change in Auditor Letter69-72

Notification of Adverse Financial Condition Letter 73-76

Auditor Reports for Communicating Unremediated Material Weaknesses in Internal Control to Insurance Regulators 77-80

Accountant’s Letter of Qualifications 81-82

Appendix

A Accounting for Financial Instruments

B The New Leases Standard: FASB ASC 842

C The New Revenue Recognition Standard: FASB ASC 606

D Overview of Statements on Quality Control Standards

E Property and Liability Insurance Entity Specific Disclosures

F Examples of Development Data

G List of Industry Trade and Professional Associations, Publications, and Information Resources

H Schedule of Changes Made to the Text From the Previous Edition

Glossary

Index of Pronouncements and Other Technical Guidance

Subject Index

Produkt-Details

• Erscheinungsdatum: 27.02.2019
• Reihe/Serie: AICPA Audit and Accounting Guide
• Verlagsort: New York
• Sprache: englisch
• Maße: 150 x 221 mm
• Gewicht: 839 g
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management
• ISBN-10: 1-945498-52-8 / 1945498528
• ISBN-13: 978-1-945498-52-7 / 9781945498527
• Zustand: Neuware