STRAWBERRY WAFFLES Flashcards
The Public-Private Partnership Program of the Philippines is a flagship program of transparency, accountability, and sustained partnership with the private sector.
TRUE
In some cases, the grantor may provide other items to the service concession operator. If such assets form part of the consideration payable by the grantor for these services, these assets are recognized as government assistance.
FALSE
Insurer which accepts part of a risk in a reinsurance.
REINSURER
These are cash flows arising from the costs of selling, underwriting, and starting a group of insurance contracts that are directly attributable to the portfolio of insurance contracts to which the group belongs.
INSURANCE ACQUISITION CASH FLOWS
An arrangement governed by a contract between the operator and the government that sets out performance standards, mechanisms for adjusting prices or rates and arrangement for arbitrating disputes is called: (select all that apply)
I. BUILD-OPERATE-TRANSFER
II. REHABILITATE-OPERATE-TRANSFER
III. PUBLIC-TO-PRIVATE SERVICE CONCESSION AGREEMENT
Which of the following is an insurance risk?
PURE RISK
In general, insurance acquisition cash flows are recognized as asset or liability when the entity pays or receives the cash flows before the group is recognized. When the group is recognized, the asset or liability is derecognized.
TRUE
Time apportionment method calculates unearned premium reserve both for policies that are annual and non-annual periods.
TRUE
According to PFRS 17, an insurance contract is not derecognized when_______
ITS TERMS HAVE BEEN MODIFIED AND THE MODIFICATION IS NOT SUBSTANTIVE
PFRS 17 applies to_______.
PROPERTY INSURANCE
According to PFRS 17, insurance service result is recognized in _________.
PROFIT OR LOSS
In insurance contracts, premiums are regarded as being earned evenly over the period of the policy from the inception date.
TRUE
In a contractual service concession arrangement, the operator shall account for revenue and costs relating to construction or upgrade service in accordance with PFRS 15-Revenue Contracts.
TRUE
In accordance with PAS 23, borrowing costs attributable to the arrangement shall be recognized as an _____________ in the period in which they are incurred, unless the operator has a contractual right to receive an intangible asset.
EXPENSE
If the assessment based on liability adequacy test shows that the carrying amount of its insurance liabilities is inadequate in the light of estimated future cash flows, the entire deficiency shall be recognized in _______________.
PROFIT OR LOSS
Claims are liabilities or losses incurred of the insurer and is often used interchangeably with the term policy benefits or losses.
TRUE
Defined as a reinsurance of a reinsurance assumed when the reinsurer will retrocede a whole or part of the risk accepted from the direct insurer to another reinsurer.
RETROCESSION
PFRS 17 also applies to insurance contracts whereby the entity is the policyholder, rather than the issuer or insurer.
FALSE
The “premium allocation approach” cannot be applied to which of the following insurance contracts?
INSURANCE CONTRACTS WITH SIGNIFICANT VARIABILITY IN THEIR FULFILLMENT CASH FLOWS
The PFRIC 12 provides the accounting principles for recognizing and measuring the obligations and related rights in service concession arrangements. The issues addressed may include the following:
I. OPERATING SERVICES
II. BORROWING COST
III. SUBSEQUENT ACCOUNTING TREATMENT OF A FINANCIAL ASSET AND AN INTANGIBLE ASSET
The policyholder under a reinsurance contract is called________
CEDANT
The terms of the contractual arrangement may require the operator to:
I. MAINTAIN THE INFRASTRUCTURE TO A SPECIFIC LEVEL OF SERVICEABILITY
II. RESTORE THE INFRASTRUCTURE TO A SPECIFIED CONDITION BEFORE IT IS HANDED OVER TO THE GRANTOR AT THE END OF THE REPORTING PERIOD
PFRS 17 prescribes the principles for the recognition, measurement, presentation, and disclosure of insurance contracts by an insurer. It applies to:
I. INSURANCE AND REINSURANCE CONTRACTS ISSUED BY AN INSURER
II. REINSURANCE CONTRACTS HELD BY AN INSURER
III. INVESTMENT CONTRACTS WITH DISCRETIONARY PARTICIPATION FEATURES ISSUED BY AN INSURER
A significant feature of most service concession arrangements is the public service nature of the obligation undertaken by the private sector.
FALSE
Which of the following types of insurance contract would probably not be covered by PFRS 17?
PENSION PLAN
PFRS 17 requires an entity to combine its insurance contracts into portfolios and further subdivide the insurance contracts comprising each portfoliio into groups. Which of the following is not of the groups of insurance contracts within a portfolio?
THOSE THAT PAY PREMIUMS AT INITIAL RECOGNITION WHICH ARE TO BE MEASURED USING THE SIMPLIFIED APPROACH
A form of reinsurance offered on an individual risk basis, and where the ceding insurer makes the offer of reinsurance and the reinsurer has the option to accept or reject the risk and quote the terms for acceptance
FACULTATIVE REINSURANCE
______________ is the party that has an obligation under an insurance contract to compensate a policyholder if an insured event occurs.
INSURER
Insurance contracts issued that are assets, insurance contracts issued that are liabilities, reinsurance contracts held that are assets and reinsurance contracts held that are liabilities should be presented in the statement of financial position in a consolidated manner.
FALSE
This consists of insurance contracts with similar risks and managed together.
PORTFOLIO
A reinsurance contract is an arrangement whereby the reinsurer, in consideration of a premium agrees to idemnify the principal ceding insurer against the loss, or part of the loss which the latter may sustain under the policy or policies that the insurer has written.
TRUE
The total cost of a claim when settled and paid will consist of the following elements:
I. ACTUAL CLAIMS PAID TO THE INSURED PARTY, LESS RECOVERIES FOR SALVAGE AND REINSURANCE
II. ALLOCATED CLAIMS EXPENSES
III. UNALLOCATED CLAIMS EXPENSES
The Philippines Financial Reporting Interpretations Committee 12 applies only if:
I. THE GRANTOR CONTROLS OR REGULATES WHAT SERVICES THE OPERATOR MUST PROVIDE WITH THE INFRASTRUCTURE, TO WHOM IT MUST PROVIDE THEM, AND AT WHAT PRICE
II. THE GRANTOR CONTROLS THROUGH OWNERSHIP, BENEFICIAL ENTITLEMENT OR OTHERWISE, ANY SIGNIFICANT RESIDUAL INTEREST IN THE INFRASTRUCTURE AT THE END OF THE TERM OF THE ARRANGEMENT
A method of computing unearned premium reserve that applies a specified percentage to the total premiums written in each class of business insurance.
FIXED PERCENTAGE METHOD
PFRS 17 also applies to financial assets and financial liabilities of the insurer.
FALSE
The risk accepted by the reinsurer is also referred as___________
INWARD REINSURANCE
To the extent that it has an unconditional contractual right to receive cash or another asset from, or at the direction of, the grantor for the construction services. The operator recognized it as____________.
A FINANCIAL ASSET
Entity A, as manufacturing entity, obtains insurance against product liability from Entity B, an insurance company. Entity B then cedes the insurance contract with Entity C, another insurance company.
How does Entity B account for the insurance contract with Entity A according to PFRS 17?
EITHER GENERAL MODEL OR PREMIUM ALLOCATION APPROACH
Entity A, as manufacturing entity, obtains insurance against product liability from Entity B, an insurance company. Entity B then cedes the insurance contract with Entity C, another insurance company.
How does Entity C account for the insurance contract ceded by Entity B?
EITHER GENERAL MODEL OR PREMIUM ALLOCATION APPROACH
Entity A, as manufacturing entity, obtains insurance against product liability from Entity B, an insurance company. Entity B then cedes the insurance contract with Entity C, another insurance company.
How does Entity B account for the insurance contract ceded to Entity C?
MODIFICATION TO GENERAL MODEL FOR REINSURANCE CONTRACTS HELD
Entity A, as manufacturing entity, obtains insurance against product liability from Entity B, an insurance company. Entity B then cedes the insurance contract with Entity C, another insurance company.
The contract between Entity B and Entity C is__________
REINSURANCE CONTRACT
In the service concession arrangement, PFRIC 12 specifies that the infrastructure shall be recognized as property, plant, and equipment of the operator because the contractual service arrangement conveys the right to control the use of the public service infrastructure to the operator.
FALSE
The risk reinsured is also known as
OUTWARD REINSURANCE
A new risk created by the contract is also an insurance risk.
FALSE
The following are examples of insurance contracts, except:
SELF INSURANCE
A premium deficiency arises when the unearned premium reserve is less than the anticipated claims and related expenses.
TRUE
One of the groups of insurance contracts within a portfolio consists of those that pay premiums at initial recognition which are to be measured using the simplified approach.
FALSE
Represent a primary source of revenue for an insurance company conducting general insurance business
PREMIUMS RECEIVED AND RECEIVABLE
The unearned profit from a group of insurance contracts is referred to under PFRS 17 as ____________
CONTRACTUAL SERVICE MARGIN
One of the characteristics of an insurance contract is the transfer of significant insurance risk from the issuer to the policyholder.
FALSE
A group of insurance contracts is initially measured at the total of either fulfillment cash flows or the contractual service margin
FALSE
In general, idemnification on insurance contracts is in the form of cash.
TRUE
The purpose of unbundling the components of a contract (insurance and deposit components) is to allow the omission of assets and liabilities from its balance sheet or adjusting liabilities for any changes that have arisen if any unrealized gains and losses on assets have been realized
FALSE
Refers to premiums that could have been written by insurance agents close to the end of the reporting period, but the policies may not have been booked-in at the end of the reporting period by the insurer due to adminstrative delays in the submission of returns by the agents
PIPELINE PREMIUMS
A type of service concession arrangement wherein an operator constructs the infrastructure that will be used to provide the public service, operates and maintains that infrastructure for a specified period of time, obliged to hand over the infrastructure to the grantor in a specified condtion at the end of the period of the arrangement.
BUILD-OPERATE-TRANSFER (BOT)
A type of insurance contract where the insurer directly accepts risk from the insured and assumes the sole obligation to compensate the insured in case of a loss event.
DIRECT INSURANCE CONTRACT
Defined as the date from which an insurer effectively assumes the risk insured in respect of an insurance policy.
INCEPTION DATE
The PFRS that covers most motor, travel, life, and property insurance contracts, as well as most reinsurance contracts.
PFRS 17
These are expenses incurred directly in an individual claim and these include surveyor’s fees, loss-adjusters’ fees, and legal fees
ALLOCATED CLAIMS EXPENSES
For concession arrangements, in providing the construction or upgrade services, the consideration received for receivable by the operator shall be recognized at its ___________
FAIR VALUE
It is a demand by any party for payment by an insurer of a policy benefit on account of an alleged loss resulting from an event or events alleged to be covered by a policy of insurance.
INSURANCE CLAIM
These are expense which relate to the reporting, recording, and adjustment of claims which may include the entire expense of the claims department such as office overheads, salaries of staff, and a proportion of senior management overheads.
UNALLOCATED CLAIMS EXPENSES
An assessment of whether the carrying amount of an insurance liability needs to be increased or decreased based on a review of future cash flows.
LIABILITY ADEQUACY TEST
Defined as risk other than financial risk transferred from the holder of a contract to the issuer
INSURANCE RISK
The operator shall account for revenue and costs relating to operation services in accordance with _________
PFRS 15
In a service concession arrangement, the operator recognizes a __________ if it has an unconditional contractual right to receive cash or other financial asset from or at a direction of the grantor in return for constructing or upgrading the public sector’s asset.
FINANCIAL ASSET
Defined as risk other than financial risk
INSURANCE RISK
Refers to a type of insurance contract which is issued by one insurer (the reinsurer) to compensate another insurer (the cedant) for losses on one or more contracts issued by the cedant
REINSURANCE CONTRACT
In accordance with ___________, borrowing costs attributable during the construction phase of the arrangement shall be an intangible asset.
PAS 23
Represent a primary source of revenue for an insurance company conducting general insurance business
PREMIUMS
For providing the construction or upgrade services, the consideration received or receivable by the operator shall be recognized at its _____________
FAIR VALUE
Refers to an uncertain future event that is covered by an insurance contract and creates insurance risk
INSURED EVENT
An arrangement whereby a government or other public sector body contracts with a private operator to develop or upgrade, operate, and maintain the grantor’s infrastructure assets, such as roads, bridges, tunnels, airports, etc.
SERVICE CONCESSION ARRANGEMENT
In a service concession arrangement, the operator recognizes an ____________ to the extent that it receives a right to charge users of the public service and such are contingent to the extent that the public uses the service.
INTANGIBLE ASSET
A process of accounting for the components of an insurance contract
UNBUNDLING or UNBUNDLE
These are commissions and agency related expenses incurred in securing premiums on general insurance policies that vary with and are primarily related, directed to, the securing of premiums on issue and renewal of insurance policies.
ACQUISITION COSTS
The standard that interprets various standards in setting out the accounting requirement for public-to-private service concession arrangments
PFRIC 12
Service concession arrangement is often referred to as ____________
PUBLIC-TO-PRIVATE ARRANGEMENT
A type of reinsurance whereby the ceding insurer undertakes payment of all losses up to a pre-agreed amount. The balance of any loss that exceeds that agreed limit will be met by the reinsurers usually up to a contractual maximum.
NON-PROPORTIONAL REINSURANCE
For providing the construction or upgrade services, the consideration received or receivable by the operator shall be recognized at its amortized cost
FALSE
PFRS 17 does not apply to:
INSURANCE CONTRACTS WHEREBY THE ENTITY IS THE POLICYHOLDER, RATHER THAN THE ISSUER
PFRS 17 specifically requres an insurer to offset insurance liabilities against related reinsurance assets in its statement of financial position
FALSE
A party that has a right to compensation under an insurance contract if an insured event occurs.
POLICYHOLDER
The percentage usually applied in the Philippines, following the fixed percentage method of calculating the unearned premiume reserve for general insurance policie such as fire and motor policies is
35-55%
In general, insurance receivables are measured at fair value using the effective interest method and are subject to the impairment test
FALSE
An insurance contract is onerous if the total of its fulfillment cash flows, any previously recognized acquisition cash flows, and any cash flows arising from the contract at initial recognition date is a net outflow of which the net outflow is recognized as a loss in the statement of profit or loss
TRUE
In construction or upgrade services, the operator shall account for revenue and costs relating to construction or upgrade services in accordance with PAS 11, generally using the:
STAGE COMPLETION METHOD
These are cash flows arising from the costs of selling, underwriting, and starting a group of insurance contracts that are directly attributable to the portfolio of insurance contracts to which the group belongs.
INSURANCE ACQUISITION CASH FLOWS
A process of accounting for the components of an insurance contract.
UNBUNDLING or UNBUNDLE
A process of accounting for the components of an insurance contract.
UNBUNDLING or UNBUNDLE
The following are the essential elements in the definition of an insurance contract, except:
INSURANCE RISK HAS TO BE COMPENSATED THROUGH REINSURANCE
A reinsurance asset is impaired if and only if:
I. There is objective evidence as a result of an event that occurred after initial recognition that the cedant may not receive all amounts due to it under the terms of the contract.
II. That event has a reliably measurable impact on the amounts that the cedant will receive from the reinsurer.
