|
IAS 39 “Financial Instruments: Recognition and Measurement” was issued by the International Accounting Standards Board (IASB), initiated major changes in its previous accounting concepts on a historical-cost accounting basis to result in the financial instruments that shall be measured at fair value instead. In response to the trend of globalization of financial services and become part of the worldwide trend of development, the Accounting research and development foundation had prescribed that Accounting Treatment of the Financial Products of Statement of Financial Accounting Standards No.34, taking into consideration the IAS 39, and shall be applicable for annual periods after 1 January 2006. Since the IAS 39 requires that most financial assets and financial liabilities should be measured at fair value, is expected to exert a powerful influence over various enterprises, among which Financial/Insurance Enterprises facilitated to process the dealing of more financial products could be suffered the greatest impacts. With that sorts of conflicts might arise after implementation, the Taiwan government has established the “ Fair Value Accounting Initiative ” to be responsible for conducting a full-scale research program, and to prepare other necessary complementary measures in order to reduce its adverse impacts effectively. Hence, this research aims to analyze factors relating to the loss/profit of Life Insurance Business in Taiwan for developing the Accounting Treatment of the Financial Products.
The Taiwanese Statements of Financial Accounting Standards No. 34 referred to the IAS 39 were enacted in 2003. Because the IAS 39 comes up with further, more amendments, the material discrepancy between the two Standards is being enhanced gradually. Considering the discrepancy, the Accounting research and development foundation started to take action to revise the Statements of Financial Accounting Standards No. 34. This study conducts an analysis of the content of financial statements prepared by foreign famous companies (to use the insurance industry as example) after the enforcement of the new standards, based on the amendment to the Financial Instruments: Disclosure and Presentation of Financial Accounting Standards No.34 and No.36, provides it to the No. 1 and No. 2 listed companies in the insurance business of Taiwan for purposes of responding to occurrences at home so as to serve as a reference for accounting treatment, and to extend and research current consciousness and concepts of risk by using the principle of fair value accounting for evaluation.
From this study we discover that fund utilization matters in the insurance business at home and abroad are approximately identical. However, due to differences of the investment environment and considerable discrepancy of the market volatility, every domestic and foreign company has different measures to be taken in response. With the coming of the international trend, how to reach the balance of today’s domestic and international situations in financial products classification, particularly those classifying the bond investment, are the most desired expectation and consideration in domestic life insurance companies. Furthermore, the companies begin to think over that the ROI is not the only indicator for performance measures, shall also consider the risks associated with any investment, thus, under the fair value method, which help the companies to achieve a successful, sustainable business operation and management.
|