The International Accounting Standards Board has published its proposal for how to modify insurance accounting under international rules, offering a good sneak peak at will soon be proposed by the Financial Accounting Standards Board for U.S. Generally Accepted Accounting Principles.

The IASB's proposal would establish a measurement model to provide investors with information about how insurance contracts contribute to an entity's financial position and performance. The balance sheet would reflect the expected contract profit from the insurance contract and the current estimate of the amount of future cash flows from the contract, adjusted to reflect the timing and uncertainty associated with those cash flows. The statement of comprehensive income would reflect underwriting experience, changes in uncertainty and profit from the services in the period, and a current and cost-based view of the cost of financing the contract.

The IASB says the U.S. proposal will contain important differences in how to portray the pattern of profit recognition and now the entity reflects changes in the estimates of the profit that is earned from insurance contracts. FASB and IASB have worked jointly on the project and reached a number of common conclusions about how to improve and simplify insurance accounting. However, the two boards are working under different time lines and from different starting points, so the proposals will not be perfectly converged.

The IASB for example, has no existing standard and has already issued an earlier proposal. The board heard feedback that the proposal would add artificial accounting volatility to insurance accounting, which IASB says it has addressed with its newest proposal. FASB, on the other hand, has rules in place that it is looking to improve with its first proposal on the subject. The comment periods for both proposals are expected to overlap, giving time for constituents to see both before issuing comments on either one.

“We are approaching the end of this important project to bring consistency and transparency to the accounting for Insurance contracts,” said IASB Chairman Hans Hoogervorst in a statement. The proposal “responds to concerns expressed about non-economic volatility resulting from our previous proposals.”

The IASB is accepting comments through Oct. 25. IASB said it expects to issue a final standard after deliberating feedback to the latest proposal, but companies will likely have up to three years to adopt the standard.