Cash Accounting
GAAP and SAP guidance define short-term highly liquid investments reported by an Insurance Company within cash and cash equivalents. The guidance includes varying requirements for maturity dates depending on type of cash equivalent and whether the Insurance Company follows GAAP or SAP reporting. To appropriately reflect the cash and cash equivalents available for use, the Insurance Company must prepare bank reconciliations at the financial statement measurement date to adjust amounts reported by financial institutions for pending transactions and amounts in transit. Journal entries are recorded to account for these differences to reflect the available cash and cash equivalents reported in the Insurance Company’s financial statements.
