As noted in the interpretation, “reporting entities have been required to reflect various accounting adjustments in their financial statements” as a result of the Tax Cuts and Jobs Act (the Act). Some of these accounting computations or estimates are considered “complete” while some of these accounting computations or estimates are considered “incomplete” when the statutory financial statements are filed. SSAP No. 9, Subsequent Events, requires, as additional information becomes available, for the reporting entity to update their accounting computations or estimates and identify the updated estimates as a Type I subsequent event in the audited financial statements.
INT 18-01 “…considers a limited time, limited scope exception to SSAP No. 9 to not require recognition of changes in reasonable estimates from the Act as Type I subsequent events after the issuance of the statutory financial statements.” During this meeting the SAPWG adopted that “reasonable estimates updated and or established after the issuance of the 2017 statutory financial statements, but before the issuance of the year-end 2017 audited financial statements, shall not be recognized [emphasis added] as Type I subsequent events.” Instead, these changes in estimates shall be recognized as a change in accounting estimate in accordance with SSAP No. 3, Accounting Changes and Corrections of Errors, “which are included in the statement of income in the period when the information necessary to update the estimate becomes available.”
Although INT 18-01 allows for this one time exception, “…reporting entities shall disclose updated estimates in accordance with SSAP No. 9, paragraph 13, audited financial statement disclosure that identifies subsequent events after the date subsequent events were reviewed for the statutory financial statements. (This would be a disclosure of the updated estimate in the audited financial statements only, not recognition of the updated estimate.)”
This exception will be nullified on December 31, 2018 and is only applicable to the year-end 2017 audited financial statements.
Other items of interest noted in INT 18-01 include the following:
- Clarification on the completion of Note 9C
- Clarification on Reporting Changes to Deferred Tax Assets and Liabilities:
- Change in Net Unrealized Capital Gains (Losses) Less Capital Gains Tax
- Change in Net Deferred Income Tax
- Change in Nonadmitted
For additional information on the other items of interest you can access the interpretation following the link below:
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