Tentative Board Decisions

Tentative Board decisions are provided for those interested in following the Board’s deliberations. All of the reported decisions are tentative and may be changed at future Board meetings.

November 19, 2014 FASB Board Meeting

Insurance: Targeted Improvements to the Accounting for Long-Duration Contracts. The Board discussed alternative discount rates to reflect the time value of money in the calculation of the liability for future policy benefits.

Discount Rate

The Board decided that long-duration insurance contracts that are discounted using an expected investment yield under existing GAAP should be discounted using a rate based on a portfolio of high-quality fixed-income investments.

Next Steps

At a future Board meeting, the Board will consider the application of the discount rate to insurance contracts for which the liability for future policy benefits is discounted using a rate other than an expected investment yield under existing GAAP. It also will clarify the concept of “high-quality,” evaluate related disclosure requirements, and continue to deliberate other targeted improvements to accounting for long-duration contracts.

Conceptual Framework: Measurement. The Board discussed a process for establishing standards for determining changes in carrying amounts (remeasurements or subsequent measurements). The Board directed the staff to continue developing the concepts underlying that process.

Disclosure Framework: Board’s Decision Process. The Board discussed whether and, if so, how the discussion of materiality in FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting, should be modified. The Board decided to:
  1. Change the description of materiality in Concepts Statement 8 to explain that materiality is a legal concept that varies by jurisdiction. Concepts Statement 8 will include the U.S. Supreme Court’s description.
  2. Retain the notion that materiality is an entity-specific judgment and that it is different from relevance, which is assessed by the Board.