The Securities and Exchange Commission has statutory authority over accounting standards used by publicly traded companies traded on U.S. exchanges. Under the direction of the SEC, the Financial Accounting Standards Board develops generally accepted accounting principles. The FASB sets standards based on its conceptual framework and offers guidance on how to implement these standards. The American Institute of Certified Public Accountants is an organization of CPAs that set ethical standards for the accounting profession and are the people who apply and interpret U.S. GAAP. The Public Company Accounting Oversight Board, a government-backed organization, is the overseer of audits of public companies; it ensures CPAs adhere to U.S. GAAP. These organizations together influence the professional practice of CPAs and the financial reporting of companies.
In 2009, G20 leaders issued a call for convergence of accounting standards by its members by 2011. The International Accounting Standards Board, the body that develops International Financial Reporting Standards, had an agreement to converge with FASB dating back to 2002. However, many of the bigger projects, including insurance contracts, will not be converged. While it appears that full convergence of IFRS/U.S. GAAP/Statutory Accounting may be off the table for now, NAMIC supports the viewpoint that any authoritative international body exploring possible changes to existing accounting guidance that materially affect the conduct of the insurance business in the United States and elsewhere will be met with strong opposition. To that end, NAMIC opposes the use of IFRS accounting standards as the basis for the Insurance Core Principles as developed by the International Association of Insurance Supervisors.
NAMIC supports the viewpoint that many of the measures emanating from foreign regulatory bodies, and which are now being considered by the National Association of Insurance Commissioners, appear to be extreme and excessive. NAMIC also supports the notion that accounting standards should vary according to the size of the regulated entity, and the rules and standards that are appropriate for large insurance companies may not be appropriate for smaller companies and vice versa.