PSAK - 19th Indonesia Rendezvous

CHALLENGES FOR HIGH QUALITY FINANCIAL REPORTING AND PROGRESS CONVERGENCE PLAN IFRS IN 2012 (Impact on Insurance Industry in Indonesia)

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

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

2

What are Companies Saying? 3

Evolution of Indonesian Financial Accounting Standard 4

Harmonisasi

Konvergensi

Adopsi

1994

2012

????

IFRS Convergence 2012 in ndonesia 5

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 convergence 6

Convergence phase 2008-2010

PSAK Revision to IFRS based

Final convergence phase 2011

Convergence finalization

Konvergensi IFRS? SAK 2012 = IFRS 1 Januari 2009

Implementation phase 2012

Implementation of PSAK Based on IFRS

Convergence Progress up to 2012 7

No

PSAK

1

Exposure Draft

2

Public Hearing in November 2011

3

Effective date in 16 September 2008 *) 1

-

4

Effective date in 1 January 2009 **)

1

5

Effective date in 1 Januari 2011

6

Effective date in 1 Januari 2012

7

Effective date in 1 Januari 2013 ***)

ISAK

3

TOTAL

2

-

Revoke of PSAK 1

1

16

1

-

-

-

7

-

13

10

3

-

1

-

35

19

4

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

IFRS convergence progress up to 2012 8

List of Exposure Draft: IFRS 1: First Time Adoption IAS 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 2012 9

37

37

37

37

37 35

23

9 2

10

FRS Framework in Indonesia 10

Indonesian FRS (SAK)

Public Sector Accounting Standard

PILAR 1

PILAR 2

SAK (IFRS Based)

SAK ETAP

PSAK SYARIAH PSAK NIRLABA

SAP

Characteristics of IFRS 11

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 measurements More extensive disclosure requirements

Challenges 12

The convergence process of relevant laws and regulations (BAPEPAM, Central Bank, Tax, etc) Dissemination of IFRS Convergence information to all stakeholders through out Indonesia IFRS is moving target Readiness 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 IFRS 13

IFRS PSAK

ROSC Accounting and Auditing 14

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 1990s Accounting and Audit is one of the 12 ROSCs The objective is to helps member countries strengthen their financial systems by improving compliance with internationally recognized standards and codes.

ROSC Accounting and Auditing 15

ROSC Report 2010 recognizes significant accomplishments since ROSC 2005 including : Significant increase in number of PSAK that are IFRS Convergent Issuance 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-IAI Regional/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 2011 Steering Committee for the 6th IFRS Regional Policy Forum March 2012 in Kuala Lumpur Active Involvement in EEG (Emerging Economic Group) meeting Intensive communication with IASB. Attended WSS Meeting every year.

Financial Reporting Paradigme Changes 17

Relevant vs Conservatism Forward Looking/Intuitive vs Accountability Substance vs Legal Form Entity Concept vs Parent Concept Beyond Financial Accounting Disclosures

18

PSAK STATUS AS OF January 1, 2012

The IFRS Convergence Status in Indonesia 19

IFRS IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 2 Share-based Payment

IFRS 4 Insurance Contracts

IFRS Versio n

SAK

Effective Date Not yet adopted

June 2009 Jan-09

PSAK 53 Pembayaran Berbasis Saham

01 Jan 2012

PSAK 22 Kombinasi Bisnis

01 Jan 2011

Jan-09

PSAK 62 Kontrak Asuransi

01 Jan 2012

July 2009 PSAK 58 Aset tidak lancar yang dimiliki untuk 01 Jan 2011 dijual dan operasi yang dihentikan 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 IFRS 8 Operating Segments

Mar-09 Jan-09

PSAK 60 Instrumen Keuangan: Pengungkapan PSAK 5 Segmen Operasi

01 Jan 2012 01 Jan 2011

IFRS ke SAK 20

IFRS

IFRS Version

SAK

Effective Date

IAS 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

Jan-09

PSAK 57 Kebijakan Akuntansi, Perubahan estimasi Akuntansi dan Kesalahan

01-Jan-11

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

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Events after the Reporting Period

IFRS ke SAK 21

IFRS

IFRS Version

SAK

Effective Date

IAS 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 Pemerintah dan 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 SAK 22

IFRS

IFRS Version Jan-09 Jan-10 Jan-09 Jan-09 Jan-09 Jan-09 Jan-09

SAK

Effective Date

01-Jan2012 (ED) 01-JanPSAK 30 Sewa 2012 (ED) 01-JanPSAK 23 Pendapatan 2011 01-JanPSAK 24 Imbalan Kerja 2012 PSAK 61 Akuntansi Hibah 01-JanPemerintah dan pengungkapan 2012 bantuan pemerintah PSAK 10 Pengaruh perubahan 01-Jankurs valuta asing 2012 01-JanPSAK 26 Biaya Pinjaman 2012 (ED) PSAK 16 Aset Tetap

IFRS ke SAK 23

IFRS IAS 33 Earnings per Share

IFRS Version

SAK

June 2009 PSAK 53 Laba per Saham

Effective Date 01-Jan-12

IAS 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-12

IAS 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 SAK 24

IFRS IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities

IFRS Version Sep-04

SAK ISAK 9 Perubahan atas Liabilitas Aktivitas Purnaoperasi, Restorasi, dan Liabilitas Serupa

IFRIC 2 Members' Shares in Co-operative Entities and Similar Instruments IFRIC 4 Determining whether an Arrangement contains a Lease IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 6 Liabilities arising from Participating in a Specific Market¬aste Electrical and Electronic Equipment

Effective Date 01-Jan-11

Not adopted Not relevan in Indonesia Jan-07

ISAK 8 Perjanjian mengandung sewa

Sep-08 Not adopted Not relevan in Indonesia Not adopted Not relevan in Indonesia

IFRS ke SAK 25

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

IFRS Version Jan-09

SAK ISAK 19 Penerapan pendekatan penyajlan kembali PSAK 63 pelaporan keuangan dalam ekonomi hiperinflasi

IFRIC 8 Scope of IFRS 2

01-Jan-12

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)

IFRIC 10 Interim Financial Reporting and Impairment

Jan-09

ISAK 17 Laporan keuangan interim dan penurunan nilai

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions

IFRIC 12 Service Concession Arrangements

Effective Date

1 Jan 2012 (Exposure Draft) 01-Jan-11 Not adopted included in PSAK 53 (IFRS 2 as of June 2009 version)

Jan-09

ISAK 16 Perjanjian konsesi jasa

01-Jan-12

IFRS ke SAK 26

IFRS IFRIC 13 Customer Loyalty Programmes

IFRS Version

SAK

Effective Date

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 Noncash Assets to Owners

Jul-09

ISAK 11 Distribusi aset nonkas kepada pemilik

01-Jan-11

IFRS ke SAK 27

IFRS

IFRS Version

SAK

SIC-7 introduction of the Euro

Effective Date Not adopted Not relevan in Indonesia 01-Jan-12

SIC-10 Government Assistance No Specific Relation to Operating Activities

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

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

Jan 2009 ISAK 23 Sewa Operasi - Insentif

01-Jan-12 Not adopted Incompatible with Indonesian Tax Regulation

IFRS ke SAK 28

IFRS SIC-25 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease

IFRS Version

SAK

Jan-09

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

01 Jan 2012

Jan-09

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

01 Jan 2012

ISAK 22 Perjanjian Konsesi Jasa: Pengungkapan

01 Jan 2012

SIC-29 Service Concession Arrangements: Disclosures

Not adopted Not relevan in Indonesia

SIC-31 Revenue - Barter Transactions Involving Advertising Services SIC-32 Intangible Assets - Web Site Costs

Effective Date

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

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

Potential Impacts of PSAK 2011/2012 to Insurance Company 30

IMPLEMENTATION COMPLEXITY

PSAKs Issue A PSAK 1 : Presentation of Financial Statements B PSAK 4 : Consolidated and Separate Financial Statements

Urgent

High

Medium

2011

2012

A-C

D-K-P-R

F-B-E

O

G-H-J-M– N-Q-U

I-L-S-T

C D E F G H I J K L M N O P Q R S T U

PSAK 7 : Related Party Disclosure PSAK 10 : The Effects of Changes in Foreign Exchange Rates PSAK 15 : Investment in Associates PSAK 19 : Intangible Assets PSAK 22 : Business Combinations PSAK 23 : Revenue PSAK 24 : Emloyee Benefit PSAK 25 : Accounting Policies, Changes in Accounting, Estimates and Errors PSAK 28 : Accounting for General Insurance PSAK 46 : Income Taxes PSAK 48 : Impairment of Assets PSAK 58 : Non-current Assets Hold for Sale and Discontinued Operations PSAK 60 : Financial Instruments Disclosures PSAK 62 : Insurance Contracts PSAK 12 : Interest in Joint Ventures PSAK 36 : Accounting for Life Insurance PSAK 50 : Financial Instruments Presentation PSAK 56 : Earning per Shares PSAK 57 : Provisions, Contingent Liabilities and Contingent Assets

31

IFRS Changes the Presentation of Financial Statement

Current Practices 32

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 Liquidity Statement of Comprehensive Income: One vs Two Statements Non Controlling Interest (NCI) - part of Equity 3rd 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 Income 37

Consolidated Statement Of Income 38

Consolidated Statement of Comprehensive Income 39

Consolidated Statement of Changes in Equity 40

Other Major Presentation Changes 41

Current vs Non current Liabilities Liabilities vs Equity Non current asset held for sale Segment Definition — more internal definition Reporting Currency vs Measurement Currency Related Parties: Government related entities

For Listed Entities 42

Condensed vs Complete Interim F/S Bapepam 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 Entities 43

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 material Fair Value (Financial Instrument, PPE, Intangible Asset, Investment Property, Non Current Asset Held for Sale) Incurred loss vs generic provision for Financial Asset Goodwill : should not amortized but subject to impairment testing Provision vs Contingent Liabilities vs Contingent Asset Multiple deliverables Customer Loyalty program

Major Changes on Recognition and Measurement 46

Fair Value vs Amortized Cost for Financial Instrument Revaluation model for Property Plant and Equipment and Intangible Asset Fair value model for Investment Property Incurred loss vs generic provision Estimated liability` Multiple deliverables Customer Loyalty program

Business, Process. System and Control Transformation

Future Earning Forecast

Some Major Impact to Entities 47

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

48

Major Changes on PSAK62, PSAK 36 and PSAK 28

PSAK 62: Effective Date and Transitional Provision

Effective Date and Transitional Provision 50

Effective Date An 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).


Transitional Provision Disclosure If it is impracticable to apply a particular requirement of paragraphs 1035* 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, and Errors explains the term ‘impracticable’. *) Related with unbundling issues, recognition and measurement, and disclosure of explanation on recognized amounts


Transitional Provision 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


Transitional Provision 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, and Errors applies. *) Related with changes in accounting policy.

PSAK 36: Accounting For Life Insurance

PSAK 36 (1996) Vs PSAK 36 (r2011) & PSAK 62 55

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 62 Main Differences (1/7) 56 TOPICS •

Title

• Definition of shortterm contract

PSAK 36 (1996)

PSAK

• Accounting for Life Insurance

•

Changed to: Accounting for Life Insurance Contract

• Does not define the definition of short-term 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

PSAK 36 (1996) Vs PSAK 36 (r2011)/PSAK 62 Main Differences (2/7) 57 TOPICS • Unearned Premium Computation Method

• Liability for Future Policy Benefits Method

PSAK 36 (1996) • 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)

PSAK 36 (r2011) / PSAK 62 • 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]

PSAK 36 (1996) Vs PSAK 36 (r2011)/PSAK 62 Main Differences (3/7) 58 TOPICS • Offsetting of Reinsurance Asset and Liability

PSAK 36 (1996)

PSAK 36 (r2011) / PSAK 62

• Allowed by standard as long compensation is stated by reinsurance contract. [PSAK 36 (1990.26 and 31]

• Shall not offset: reinsurance assets against the related insurance liabilities; or 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)]

• Liability Adequacy Test • Not regulated

• Product Classification • Not regulated

• 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.

PSAK 36 (1996) Vs PSAK 36 (r2011)/PSAK 62 Main Differences (4/7) 59 TOPICS

PSAK 36 (1996)

PSAK 36 (r2011) / PSAK 62

• Investment Contract

• Not regulated

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

• Embedded Derivative

• Not regulated

• Specifically regulated under PSAK 62 paragraph 7-9

• Unbundling of Deposit Component

• Not regulated

• Specifically regulated under PSAK 62 paragraph 10-12

• Discretionary Participation Features (DPF)

• Not regulated

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

PSAK 36 (1996) Vs PSAK 36 (r2011)/PSAK 62 Main Differences (5/7) 60 TOPICS • Deletion of some terms

PSAK 36 (1996)

PSAK 36 (r2011) / PSAK 62

REVENUE — Short-term Contract Premium Short-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]


PSAK 36 (1996) 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]

PSAK 36 (r2011) / PSAK 62 REVENUE — Contract Premium other 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]


PSAK 36 (1996)

PSAK 36 (r2011) / PSAK 62

Estimated Claim Liability and Unearned Premium

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]

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


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.

64

PSAK 28: Accounting for General Insurance Contract

PSAK 28 (1996) Vs PSAK 28 (r2011) & PSAK 62 65

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]


• Title • Definition of short-term contract

PSAK 28 (1996)

PSAK 28 (r2011) / PSAK 62

• 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.


PSAK 28 (1996)

• Estimated Claim (IBNR and • Estimated Claim on Own NonIBNR) Retention: estimated liability on own retention in relation with reported but not settled claims, including incurred but not reported claims. • Unearned Premium • Short-term and long-term Computation Method insurance contract: Aggregate or Individually.

PSAK 28 (r2011) / PSAK 62

• 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) • Liability for Future Policy • No spesific guidance: gross or • Long-term insurance contract: gross premium reserve. Benefits Method net-premium reserve are • Short-term insurance contract: acceptable. unearned premium approach. [PSAK 28.19]


• Offsetting of Reinsurance Asset and Liability

• Reinsurance Asset Impairment

PSAK 28 (1996)

PSAK 28 (r2011) / PSAK 62

• Allowed by standard as • shall not offset: long compensation is o reinsurance assets against the related stated by reinsurance insurance liabilities; or contract. o income or expense from reinsurance [PSAK 28 (1996).28 and contracts against the expense or 33] income from the related insurance contracts. [deletion of related paragraph and referring to PSAK 62.14(d)) • Reinsurance asset is subject to • Not regulated impairment test [PSAK 28.17 referring to PSAK 62.14(e)]

• Liability Adequacy Test

• Not regulated

• Need to perform liability adequacy test (PSAK 28.17 referring to PSAK 62.14(b))


PSAK 28 (1996)

PSAK 28 (r2011) / PSAK 62

• Investment Contract

• Not regulated

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

• Embedded Derivative

• Not regulated

• 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 KASIH Terima kasih