CHALLENGES FOR HIGH QUALITY FINANCIAL REPORTING AND

CHALLENGES FOR HIGH QUALITY FINANCIAL REPORTING AND

PROGRESS CONVERGENCE PLAN IFRS IN 2012

(Impact on Insurance Industry in Indonesia)

Sumber: DSAK IAI - Rosita Uli Sinaga, 2012 (Update)

Dr. Ludovicus Sensi Wondabio CPAAnggota Dewan Standar Akuntansi Keuangan (DSAK)Ikatan Akuntan Indonesia (IAI)

2

3

What are Companies Saying?

Evolution of Indonesian FinancialAccounting Standard

4

Harmonisasi Konvergensi Adopsi

19941994 20122012 ????????

IFRS Convergence 2012 in ndonesia5

IFRS convergence 2012 program has launched by The Indonesian Institute of Accountant at the end of 2008.The objective of 2012 IFRS Convergence in Indonesia is eliminating significant gap between Indo GAAP and IFRS by 2012 which will result the Financial Statement prepared under PSAK (Local GAAP) for the year beginning on 1 January 2012 will substantially similar to IFRS Financial Statement.

Roadmap Indonesia's convergence6

Convergence phase 2008-2010

Final convergence phase 2011

Implementation phase 2012

PSAK Revision to IFRS based

Convergence finalization

Implementation of PSAK Based on IFRS

Konvergensi IFRS?SAK 2012 = IFRS 1 Januari 2009

Convergence Progress up to 20127

No PSAK ISAK Revoke of PSAK

1 Exposure Draft 3 - 1

2 Public Hearing in November 2011 2 1

3 Effective date in 16 September 2008 *)1 - 1 -

4 Effective date in 1 January 2009 **) 1 - -

5 Effective date in 1 Januari 2011 16 7 -

6 Effective date in 1 Januari 2012 13 10 3

7 Effective date in 1 Januari 2013 ***) - 1 -

TOTAL 35 19 4

*) ISAK 8 IFRIC 4: Determining Whether an Arrangement contains a Lease **) PSAK 14 IAS 2: Inventories***) ISAK 21 IFRIC 15: Agreement for the Construction of Real Estate

IFRS convergence progress up to 20128

List of Exposure Draft:IFRS 1: First Time AdoptionIAS 41 : Agriculture (Board had not make any

decision).The changes from those ED's are not substantial.Mostly are the adjustment to ensure consistency with other new PSAKs.All remaining ED should be approved by DSAK IAI before end of 2012.

IFRS convergence progress up to 20129

37 37 37 37 37

2

910

23

35

FRS Framework in Indonesia10

Indonesian FRS (SAK)

PILAR 1 PILAR 2

SAK ETAPSAK ETAP

SAK (IFRS

Based)

SAK (IFRS

Based)SAPSAP

PSAK SYARIAH

PSAK NIRLABA

Public Sector Accounting Standard

Characteristics of IFRS11

Principle-based approach that places greater D'DDemphasis on interpretation and application of principles, with a particular focus on the spirit of the principle being applied.The standards necessitate the assessment of the substance of the transactions and an evaluation of whether the accounting presentation reflects the economic reality.Focus on the need for professional judgment in arriving at accounting conclusions.Greater use of fair value as a measurement basis pacing emphasis on obtaining reliable measurementsMore extensive disclosure requirements

Challenges12

The convergence process of relevant laws and regulations (BAPEPAM, Central Bank, Tax, etc)Dissemination of IFRS Convergence information to all stakeholders through out IndonesiaIFRS is moving targetReadiness of other infrastructure (other specialists, lecturers, accounting syllaby and text books, auditing standards, fair value data)The mind set shift from rule based to principle based among all players (preparers, auditors and regulators)Principle based standard with multi interpretation.

PSAK dan IFRS13

IFRS

PSAK

ROSC Accounting and Auditing14

Report on the Observance of Standards and Codes (ROSC) is a joint World Band and IMF initiative developed in the wake of financial crisis of late 1990sAccounting and Audit is one of the 12 ROSCsThe objective is to helps member countries strengthen their financial systems by improving compliance with internationally recognized standards and codes.

ROSC Accounting and Auditing15

ROSC Report 2010 recognizes significant accomplishments since ROSC 2005 including :Significant increase in number of PSAK that are IFRS ConvergentIssuance of PSAK for SMEs.The first paragraph of Executive Summary:" Since the issuance of Accounting and Auditing ROSC in 2005, Indonesia has made significant efforts to improve the quality of corporate financial reporting. Considerable progress has been made to strengthen the institutional framework of accounting and auditing to move toward full

DSAK-IAIRegional/International Activities

16

DSAK IA1 is member of AOSSG (Asian Oceania Standard Setter Group) and has involved in 6 working group:

Leases (Co-leader), Revenue, Consolidation, Insurance Contract, Islamic Finance and Agriculture.

Host the 5th IFRS Regional Policy Forum 2011Steering Committee for the 6th IFRS Regional Policy Forum March 2012 in Kuala LumpurActive Involvement in EEG (Emerging Economic Group) meetingIntensive communication with IASB.Attended WSS Meeting every year.

Financial Reporting Paradigme Changes17

Relevant vs ConservatismForward Looking/Intuitive vs AccountabilitySubstance vs Legal FormEntity Concept vs Parent ConceptBeyond Financial Accounting Disclosures

PSAK STATUS AS OF January 1, 2012

18

The IFRS Convergence Status in Indonesia

19

IFRSIFRS

Version

SAK Effective Date

IFRS 1 First-time Adoption of International Financial Reporting Standards

Not yet adopted

IFRS 2 Share-based Payment June 2009

PSAK 53 Pembayaran Berbasis Saham 01 Jan 2012

Jan-09 PSAK 22 Kombinasi Bisnis 01 Jan 2011

IFRS 4 Insurance Contracts Jan-09 PSAK 62 Kontrak Asuransi 01 Jan 2012

July 2009 PSAK 58 Aset tidak lancar yang dimiliki untukdijual dan operasi yang dihentikan

01 Jan 2011

IFRS 6 Exploration for and Jan-09 PSAK 64 Aktivitas Eksplorasi dan Evaluasi 01 Jan 2012

Pada Pertambangan Sumber Daya Mineral

IFRS 7 Financial Instruments:Discosures

Mar-09 PSAK 60 Instrumen Keuangan:Pengungkapan

01 Jan 2012

IFRS 8 Operating Segments Jan-09 PSAK 5 Segmen Operasi 01 Jan 2011

IFRS ke SAK20

IFRS IFRS Version SAK Effective

DateIAS 1 Presentation of financial statements Jan-09 PSAK 1 Penyajian laporan keuangan 01-Jan-11

IAS 2 Inventories Jan-03 PSAK 14 Persediaan 01-Jan-09

Annual improvement

IAS 7 Statement of cash flow Jan-09 PSAK 2 Laporan arus kas 01-Jan-11

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Jan-09 PSAK 57 Kebijakan Akuntansi, Perubahanestimasi Akuntansi dan Kesalahan 01-Jan-11

IAS 10 Events after the Reporting Period Jan-09 PSAK 8 Peristiwa setelah periode

Pelaporan 01-Jan-11

IAS 11 Construction Contracts Jan-09 PSAK 34 Kontrak Konstruksi 01-Jan-11

IAS 12 Income Taxes Jan-09 PSAK 46 Pajak Penghasilan 01-Jan-12

IFRS ke SAK21


DateIAS 16 Property, Plant and Equipment Jan-09 PSAK 16 Aset Tetap 01-Jan-2012

IAS 17 Leases Jan-10 PSAK 30 Sewa 01-Jan-2012 IAS 18 Revenue Jan-09 PSAK 23 Pendapatan 01-Jan-2011

IAS 19 Employee Benefits Jan-09 PSAK 24 Imbalan Kerja 01-Jan-2012

IAS 20 Accounting for Government Grants and Disclosure of Government Assistance

Jan-09 PSAK 61 Akuntansi Hibah Pemerintahdan pengungkapan bantuan pemerintah 01-Jan-2012

IAS 21 The Effects of Changes in Foreign Exchange Rates Jan-09 PSAK 10 Pengaruh perubahan kurs

valuta asing 01-Jan-2012

IAS 23 Borrowing Costs Jan-09 PSAK 26 Biaya Pinjaman 01-Jan-2012

IFRS ke SAK22


DateJan-09 PSAK 16 Aset Tetap 01-Jan-

2012 (ED)

Jan-10 PSAK 30 Sewa 01-Jan-2012 (ED)

Jan-09 PSAK 23 Pendapatan 01-Jan-2011Jan-09 PSAK 24 Imbalan Kerja 01-Jan-2012

Jan-09PSAK 61 Akuntansi Hibah Pemerintah dan pengungkapan bantuan pemerintah

01-Jan-2012

Jan-09 PSAK 10 Pengaruh perubahan kurs valuta asing

01-Jan-2012

Jan-09 PSAK 26 Biaya Pinjaman 01-Jan-2012 (ED)

IFRS ke SAK23


DateIAS 33 Earnings per Share June 2009 PSAK 53 Laba per Saham 01-Jan-12IAS 34 Interim Financial Reporting Jan-09 PSAK 3 Laporan Keuangan Interim 01-Jan-11

IAS 36 Impairment of Assets Jan-09 PSAK 48 Penurunan Nilai Aset 01-Jan-11

IAS 37 Provisions, Contingent Liabilities and Contingent Assets

Jan-09 PSAK 57 Provisi, Liabilitas Kontinjensi, dan Aset Kontinjensi 01-Jan-11

IAS 38 Intangible Assets Jan-09 PSAK 19 Aset Takberwujud 01-Jan-12IAS 39 Financial Instruments: Recognition and Measurement Jan-09 PSAK 55 Instrumen Keuangan:

Pengakuan dan Pengukuran 01-Jan-12

IAS 40 Investment Property Jan-09 PSAK 13 Properti Investasi (ED) 01-Jan-12

IAS 41 Agriculture Not yet adopted

IFRS ke SAK24


DateIFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

Sep-04 ISAK 9 Perubahan atas Liabilitas Aktivitas Purnaoperasi, Restorasi, dan Liabilitas Serupa

01-Jan-11

IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments

Not adopted Not relevan in Indonesia

IFRIC 4 Determining whether an Arrangement contains a Lease

Jan-07 ISAK 8 Perjanjian mengandung sewa Sep-08

IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

Not adoptedNot relevan in Indonesia

IFRIC 6 Liabilities arising from Participating in a Specific Market¬aste Electrical and Electronic Equipment

Not adopted Not relevan in Indonesia

IFRS ke SAK25


DateIFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies

Jan-09 ISAK 19 Penerapan pendekatan penyajlan kembali PSAK 63 pelaporan keuangan dalam ekonomi hiperinflasi

01-Jan-12

IFRIC 8 Scope of IFRS 2 Not adopted Included in PSAK 53 (IFRS 2 as of

June 2009 version)IFRIC 9 Reaisessment of Embedded Derivatives

Jan-09 ISAK 26 Penilaian Ulang Derivatif Melekat (KED)

1 Jan 2012 (Exposure Draft)

IFRIC 10 Interim FinancialReporting and Impairment

Jan-09 ISAK 17 Laporan keuangan interim dan penurunan nilai

01-Jan-11

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions

Not adopted included in PSAK 53 (IFRS 2 as of

June 2009 version)

IFRIC 12 Service Concession Arrangements

Jan-09 ISAK 16 Perjanjian konsesi jasa 01-Jan-12

IFRS ke SAK26


DateIFRIC 13 Customer Loyalty Programmes Jul-08 ISAK 10 Program loyalitas

pelanggan 01-Jan-11

IFRIC 14 IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Jan-09

ISAK 15 PSAK 24 batas aset manfaat pasti, persyaratan pendanaan minimum dan interaksinya

01-Jan-12

IFRIC 15 Agreements for the Construction of Real Estate Jan-09 ISAK 21 Perjanjian konstruksi real

estat 01-Jan-13

IFRIC 16 Hedges of a Net Investment in a Foreign Operation Jan-09 ISAK 13 Lindung nilai investasi neto

atas kegiatan usaha luar negeri 01-Jan-12

IFRIC 17 Distributions of Non-cash Assets to Owners Jul-09 ISAK 11 Distribusi aset nonkas

kepada pemilik 01-Jan-11

IFRS ke SAK27


DateSIC-7 introduction of the Euro Not adopted

Not relevan in Indonesia

SIC-10 Government Assistance No Specific Relation to Operating Activities

Jan 2009 ISAK 18 Bantuan pemerintah -tidak ada relasi spesifik dengan aktitivas operasi

01-Jan-12

SIC-12 Consolidation - Special Purpose Entities

Jan 2009 ISAK 7 Konsolidasi entitas bertujuan khusus

01-Jan-12

SIC-13 Jointly Controlled Entities -Non-Monetary Contributions by Venturers

Jan 2009 ISAK 12 PBE - kontribusi aset nonmoneter oleh venturer

01-Jan-11

SIC-15 Operating Leases -Incentives

Jan 2009 ISAK 23 Sewa Operasi - Insentif 01-Jan-12

SIC-21 income Taxes - Recovery of Revalued Non-Depreciable Assets

Not adopted Incompatible

with Indonesian Tax Regulation

IFRS ke SAK28


Date

SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders

Jan-09ISAK 20 Pajak penghasilan -perubahan status pajak entitas dan para pemegang sahamnya

01 Jan 2012

SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease

Jan-09

ISAK 24 Evaluasi Substansi beberapa transaksi yang melibatkan suatu bentuk legal sewa

01 Jan 2012

SIC-29 Service Concession Arrangements: Disclosures

ISAK 22 Perjanjian Konsesi Jasa: Pengungkapan 01 Jan 2012

SIC-31 Revenue - Barter Transactions Involving Advertising Services

Not adopted Not relevan in

Indonesia

SIC-32 Intangible Assets - Web Site Costs Jan-09 ISAK 14 Aset tidak berwujud -

biaya situs web 01 Jan 2011

The Impact of IFRS Convergence

and Major Changes on PSAK 62, PSAK 36 and PSAK 28

Sumber: Deloitte's Insurance Seminar, Rosita Uli Sinaga, 2011

Dr. Ludovicus Sensi Wondabio CPAAnggota Dewan Standar Akuntansi Keuangan (DSAK)

Ikatan Akuntan Indonesia (IAI)

Potential Impacts of PSAK 2011/2012 to Insurance Company

30

PSAKs IssueA PSAK 1 : Presentation of Financial StatementsB PSAK 4 : Consolidated and Separate Financial Statements

C PSAK 7 : Related Party DisclosureD PSAK 10 : The Effects of Changes in Foreign Exchange RatesE PSAK 15 : Investment in AssociatesF PSAK 19 : Intangible AssetsG PSAK 22 : Business CombinationsH PSAK 23 : RevenueI PSAK 24 : Emloyee BenefitJ PSAK 25 : Accounting Policies, Changes in Accounting, Estimates and

ErrorsK PSAK 28 : Accounting for General InsuranceL PSAK 46 : Income TaxesM PSAK 48 : Impairment of AssetsN PSAK 58 : Non-current Assets Hold for Sale and Discontinued

OperationsO PSAK 60 : Financial Instruments DisclosuresP PSAK 62 : Insurance ContractsQ PSAK 12 : Interest in Joint VenturesR PSAK 36 : Accounting for Life InsuranceS PSAK 50 : Financial Instruments PresentationT PSAK 56 : Earning per SharesU PSAK 57 : Provisions, Contingent Liabilities and Contingent Assets

2011 2012

Urgent A - C D - K - P - R

High F - B - E O

MediumG - H - J - M –

N - Q - UI - L - S - T

IMPL

EMEN

TATI

ON

CO

MPL

EXIT

Y

IFRS Changes thePresentation of Financial

Statement

31

Current Practices32

Major Changes in Presentation and Disclosures

33

PSAK 1 par 57 (effective Januari 1, 2011):"An entity shall present current and non-current assets, and current and non-current liabilities, as separate classifications in its statement of financial position in accordance with paragraphs 63-73 except when a presentation based on liquidity provides information that is reliable and more relevant. When that exception applies, an entity shall present all assets and liabilities in order of liquidity.The order of liquidity, can be arranged from the most liquid to least liquid or vice versa.

Consolidated Statement Of Financial Position

34

Consolidated Statement Of Financial Position

35

Major Changes in Presentation and Disclosures

36

Statement of Financial Position: Current vs Non Current or if more relevant should be presented based on LiquidityStatement of Comprehensive Income: One vs Two StatementsNon Controlling Interest (NCI) - part of Equity3rd Balance Sheet if there is a restatement or reclassification

Bultek 7, entities should present the January 1, 2010 position even though the change is only limited to reclassification of NCI

No more Extraordinary Items

Consolidated Statement Of Income37

Consolidated Statement Of Income38

Consolidated Statement of Comprehensive Income

39

Consolidated Statement of Changes in Equity

40

Other Major Presentation Changes41

Current vs Non current LiabilitiesLiabilities vs EquityNon current asset held for saleSegment Definition — more internal definitionReporting Currency vs Measurement CurrencyRelated Parties: Government related entities

For Listed Entities42

Condensed vs Complete Interim F/SBapepam LK, does not allow the presentation of

semi annual FS in a condensed form (X.K.2)BEI allows entities to use condensed form in

accordance with PSAK 3 for Interim FS as of 31 March and 30 September

For Listed Entities43

Keputusan Ketua Bapepam LK No Kep-554/2010, related to Transition provision on VIII.G.7Reporting Currency vs Measurement Currency:Rule number VIII.g.7 is still applicable as long as

do not regulated or contradict with PSAK.In case that provisions in rule VIII.G.7 contradict

with PSAK, they must follow PSAK issued by DSAK IAI.

IFRS Changes The Recognition and

Measurement Of Asset, Liabilities, Equity And

Profit/Loss

Major Changes on Recognition and Measurement

45

Time value of money should be considered if the impact is materialFair Value (Financial Instrument, PPE, Intangible Asset, Investment Property, Non Current Asset Held for Sale)Incurred loss vs generic provision for Financial AssetGoodwill : should not amortized but subject to impairment testingProvision vs Contingent Liabilities vs Contingent AssetMultiple deliverablesCustomer Loyalty program

Major Changes on Recognition and Measurement

46

Fair Value vs Amortized Cost for Financial InstrumentRevaluation model for Property Plant and Equipment and Intangible AssetFair value model for Investment PropertyIncurred loss vs generic provisionEstimated liability`Multiple deliverablesCustomer Loyalty program

Some Major Impact to Entities47

Business, Process. System and Control Transformation

Business, Process. System and Control Transformation

Future Earning Forecast

Change on Profit and Financial Ratio

Loan Covenants should be evaluated

Adjustment on KPI

Change on Dividend, EPS and Tax

Future Earning ForecastFuture Earning ForecastFuture Earning Forecast

48

Major Changes on PSAK62,PSAK 36 and PSAK 28

PSAK 62: Effective Date and Transitional

Provision

Effective Date and Transitional Provision50

Effective DateAn entity shall apply this IFRS for annual periods beginning on or after

1 January 2012.

Transitional Provision

Disclosure

An entity need not apply the disclosure requirements in this standard to comparative information that relates to annual periods beginning before 1 January 2012, except for the disclosures required by paragraph 36(a) and (b)* about accounting policies, and recognised assets, liabilities, income and expense (and cash flows if the direct method is used).



Disclosure

If it is impracticable to apply a particular requirement of paragraphs 10-35* to comparative information that relates to annual periods beginning before 1 January 2012, an entity shall disclose that fact. Applying the liability adequacy test (paragraphs 15-19) to such comparative information might sometimes be impracticable, but it is highly unlikely to be impracticable to apply other requirements of paragraphs 10-34 to such comparative information. PSAK 25 (r2009): Accounting Policy, Changes in Accounting Estimates, andErrors explains the term ‘impracticable’.

*) Related with unbundling issues, recognition and measurement, and disclosure of explanation on recognized amounts



Disclosure

In applying paragraph 38(b)(iii)*, an entity need not disclose information about claims development that occurred earlier than five years before the end of the first financial year in which it applies this standard. Furthermore, if it is impracticable, when an entity first applies this standard, to prepare information about claims development that occurred before the beginning of the earliest period for which an entity presents full comparative information that complies with this standard, the entity shall disclose that fact.

*) Disclosure on actual claim vs. its estimation



Redesignation of financial assets

When an insurer changes its accounting policies for insurance liabilities, it is permitted, but not required, to reclassify some or all of its financial assets ad at fair value through profit or loss’. This reclassification is permitted if an insurer changes accounting policies when it first applies this standard and if it makes a subsequent policy change permitted by paragraph 21*. The reclassification is a change in accounting policy and PSAK 25 (r2009): Accounting Policy, Changes in Accounting Estimates, andErrors applies.

*) Related with changes in accounting policy.

PSAK 36: Accounting For Life

Insurance

PSAK 36 (1996) Vs PSAK 36 (r2011) & PSAK 6255

OLD

PSAK 36 (1996)

NEW

PSAK 36 (r2011)

PSAK 62 (2011)

"The purpose of this statement is to complement the requirements under PSAK 62: Insurance Contract" [PSAK 36.1]

PSAK 36 (1996) Vs PSAK 36 (r2011)/PSAK 62Main Differences (1/7)

56

TOPICS PSAK 36 (1996) PSAK

• Title

• Definition of short-term contract

• Accounting for Life Insurance

• Does not define the definition of short-term contract

• Changed to: Accounting for Life Insurance Contract

• Short-term insurance contract: insurance contract which only give protection without deposit component for period equal or less than 12 (twelve) months and allows insurer to cancel the contract or adjust the contract terms on each end of contract period, such as adjustment on premium or coverage given. (PSAK 36.41


57

TOPICS PSAK 36 (1996) PSAK 36 (r2011) / PSAK 62

• Unearned Premium Computation Method

• Liability for Future Policy Benefits Method

• Short-term and long-term insurance contract: Aggregate or Individually.

• Based on actuary computation: no specific method required, but commgp industry practice currently is using net-premium reserve (zillmer)

• Short-term insurance contract: Aggregate or Individually.

• Long-term insurance contract: Actuary Computation.

[PSAK 36.17]

• Long-term insurance contract: gross premium reserve.

• Short-term insurance contract without deposit: unearned premium approach.

[PSAK 36.13-14]


58


• Offsetting of Reinsurance Asset and Liability

• Liability Adequacy Test

• Product Classification

• Allowed by standard as long compensation is stated by reinsurance contract.

[PSAK 36 (1990.26 and 31]

• Not regulated

• Not regulated

• Shall not offset:reinsurance assets against the related insurance liabilities; orincome or expense from reinsurance contracts against the expense or income from the related insurance contracts.[deletion of related paragraph and referring to PSAK 62.14(d)]

• Need to perform liability adequacy test

[PSAK 36.15

• Contract need to be determined as insurance contract, or investment contract, or investment contract without DPF.


59


• Investment Contract

• EmbeddedDerivative

• Unbundling of Deposit Component

• Discretionary Participation Features (DPF)

• Not regulated

• Not regulated

• Not regulated

• Not regulated

• Based on PSAK 62, will fall under PSAK 55 (r2006)

• Specifically regulated under PSAK 62 paragraph 7-9

• Specifically regulated under PSAK 62 paragraph 10-12

• Contains specific statements that regulates classification (liability Vs. Equity), measurement, presentation, and disclosure for DPF.


60


• Deletion of some terms

REVENUE — Short-term Contract PremiumShort-term contracts premium (some life insurance terms, such as credit life insurance) are recognized as revenue in the contract period in proportion to the amount of insurance protection provided. If the period of risk differs significantly with the contract period, premiums are recognized as revenue during the period of risk in proportion to the amount of insurance protection provided. This cause premium is recognized as revenue evenly throughout the contract period (or risk period, if differ), unless the insurance protection decreased in accordance with a predetermined schedule. [PSAK 36(1996) Par. 17]

REVENUE REVENUE —Short-term Contract Premium•Deletion of "some life insurance terms, such as credit life insurance"•Deletion of "unless the insurance protection decreased in accordance with a predetermined schedule"[PSAK 36(r2011) Par. 5]


61


• Deletion of some terms

REVENUE — Long-term Contract Premium Premium long-term contract (whole life contracts and guaranteed renewable term life contracts) are recognized as revenue when due from policyholders. Liability for costs connection with such contracts are recognized during the current period and the period of the contract renewed. •The present value of estimated future policy benefits paid to policyholders or the representative deducted by present value of estimated future premium which will be received from policyholder (future policy benefits liability) are recognized when premium revenue is recognized. Estimates are based on assumptions, such as expected investment returns, mortality, morbidity, terminations, and expenses, which are determined at the titime the insurance contract was made. [PSAK 36(1996) Par. 18]

REVENUE — Contract Premiumother than Long-term Contract Premium

• Deletion of "whole life contracts and guaranteed renewable term life contracts“• Deletion of "Estimates are based on assumptions, such as expected investment returns, mortality, morbidity, terminations, and expenses, which are determined at the time the insurance contract was made.”

[PSAK 36(r2011) Par. 6]


62


• Deletion of some terms Estimated Claim Liability and Unearned Premium

•Estimated liability claims for short-term contracts, special for health and accident insurance... [PSAK 36(1996) Par. 29 & 30]

Estimated Claim Liability and Unearned Premium

•Deletion of "health and accident insurance" term.[PSAK 36(r2011) Par. 16 & 17]

Effective Date and Transitional Provision

63

Effective DateAn entity shall apply this IFRS for annual periods beginning on or after

1 January 2012.

Transitional Provision This standard is applied prospectively. Insurance contract issued

before the effective date and still in force as per 1 January 2011 should follow the requirements based on this standard prospectively. The effect of the implementation of this standard on the beginning of the effective date (1 January 2012) should be recognized as adjustment on Retained Earning as of 1 January 2012.

64

PSAK 28:Accounting for General Insurance Contract

PSAK 28 (1996) Vs PSAK 28 (r2011) & PSAK 6265

OLD

PSAK 28 (1996)

NEW

PSAK 28 (r2011)

PSAK 62 (2011)

"The purpose of this statement is to complement the requirements under PSAK 62: Insurance Contract" [PSAK 28.1]


66


• Title

• Definition of short-term contract

• Accounting for General Insurance

• Short-term contract: contract which give protection for a certain period and allows insurer to cancel the contract or adjust the contract terms on each end of contract period, such as adjustment on premium or coverage given.

• Changed to: Accounting for General Insurance Contract

• Short-term insurance contract: insurance contract which only give protection without deposit component for period equal or less than 12 (twelve) months and allows insurer to cancel the contract or adjust the contract terms on each end of contract period, such as adjustment on premium or coverage given.


67


• Estimated Claim (IBNR and NonIBNR)

• Unearned Premium Computation Method

• Liability for Future Policy Benefits Method

• Estimated Claim on Own Retention: estimated liability on own retention in relation with reported but not settled claims, including incurred but not reported claims.

• Short-term and long-term insurance contract: Aggregate or Individually.

• No spesific guidance: gross or net-premium reserve are acceptable.

• Estimated claim: estimated liability which will be borne in relation with reported but not settled claims, including incurred but not reported claims.

(PSAK 28.4]• Short-term insurance contract:

Aggregate or Individually.• Long-term insurance contract:

Actuary Computation.(PSAK 28.18)• Long-term insurance contract:

gross premium reserve.• Short-term insurance contract:

unearned premium approach.[PSAK 28.19]


68


• Offsetting of Reinsurance Asset and Liability

• Reinsurance Asset Impairment

• Liability Adequacy Test

• Allowed by standard as long compensation is stated by reinsurance contract.

[PSAK 28 (1996).28 and 33]

• Not regulated

• Not regulated

• shall not offset:o reinsurance assets against the related

insurance liabilities; oro income or expense from reinsurance

contracts against the expense or income from the related insurance contracts.

[deletion of related paragraph and referring to PSAK 62.14(d))

• Reinsurance asset is subject to impairment test

[PSAK 28.17 referring to PSAK 62.14(e)]• Need to perform liability adequacy

test(PSAK 28.17 referring to PSAK 62.14(b))


69


• Investment Contract

• Embedded Derivative

• Not regulated

• Not regulated

• Based on PSAK 62, will fall under PSAK 55 (r2006)

• Spesifically regulated under PSAK 62 paragraph 7-9.


Effective Date An entity shall apply this IFRS for annual periods beginning on or after 1 January 2012.

Transitional Provision This standard is applied prospectively. Insurance contract issued before the effective date and still in force as per 1 January 2011 should follow the requirements based on this standard prospectively. The effect of the implementation of this standard on the beginning of the effective date (1 January 2012) should be recognized as adjustment on Retained Earning as of 1 January 2012.

TERIMA KASIHTERIMA KASIHTerima kasihTerima kasih

Documents

CHALLENGES FOR HIGH QUALITY FINANCIAL REPORTING AND