Some Stakeholders Have Been Critical of Aspects of AASB 1023

question 14

Multiple Choice

Some stakeholders have been critical of aspects of AASB 1023 that introduce volatility into earnings.Why would increased volatility be considered undesirable?

• A) Increased volatility is associated with unreliable service and may lead potential policy holders to choose another company.
• B) It makes it more difficult for management to plan how to manage its profit levels.
• C) Volatile earnings make it more difficult for employees to argue for pay increases.
• D) Insurers may be put into technical default on contractual clauses relating to things such as debt covenants.

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Definitions:

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