What are the statutory accounting principles?

statutory accounting principles are specific accounting instructions for insurance companies. The National Association of Insurance Commissioners (NAIC) is a non -profit organization in the United States responsible for creating these principles. The legal accounting principles are considered to be regulatory standards and are generally more conservative than the generally received accounting principles (GAAP). GAAP is the most authoritative accounting standards in the United States. Insurance companies must prepare and submit all financial reports to regulatory bodies according to NAIC principles. Each state has a commissioner for insurance responsible for providing instructions to insurance companies regarding regulations and insurance policies. While each state is not obliged to accept NAIC regulations or standards, many states make NAIC policies to create uniformity for insurance companies. Liabilities, Assembly Disorder, Fund Evaluation, Real Estate Investment, Recognition Recognition from Software, Real Value Measurement, Recognition and Publication Requirements and Policy Declaration RequirementsThe valuation is the primary accounting standards issued by NAIC. NAIC often considers or consulted GAAP in the development of new legal principles of accounting. The Working Group for Legal Accounting (SAPWG) is the primary division of NAIC responsible for the development of new accounting procedures, procedures and instructions for insurance companies.

SAPWG regularly develops new standards for solving accounting problems that do not apply to current legal accounting principles, change current principles or replace the old principles that no longer apply in the business environment. Like GAAP, SAPWG usually issues a proposal for new accounting principles that include a summary, along with a complete discussion of details for new accounting principles. This process ensures that insurance companies and state insurance commissioners can provide information on new accounting principles. The length of time from the issue of a proposal and implementing a new accounting principleIt may differ depending on the amount of feedback on the potential update of the accounting principle.

In recent years, GAAP standards and international financial reporting (IFRS) have entered the NAIC area. In 2010, NAIC began to issue reports to insurance companies, regulatory bodies, auditors and other individuals regarding IFRS in legal accounting principles. The Council for Financial Accounting Standards, the Agency responsible for the development of GAAP, began to review the process combining GAAP with IFRS in 2006. This combination will surely affect NAIC because they are based on GAAP insurance principles. However, NAIC can implement IFRS before GAAP incorporation IFRS into current US accounting standards.