The management of Leadway Assurance Limited said it is on course toward the implementation of the International Financial Reporting Standard (IFRS 17).
IFRS 17 (previously known as IFRS 4 Phase II) is an International Financial Reporting Standard developed by the International Accounting Standards Board (IASB) providing new standards for reporting profit emergence from insurance contracts, scheduled to take effect from January 1, 2023.
The main objective of the IFRS is to standardize insurance accounting globally to help users of accounts make sensible comparisons between companies, their past performance, their current financial position and risk exposure.
Speaking on “Navigating the New Financial Reporting Standard,” at a one-day workshop organized by Leadway Assurance for members of the Nigerian Association of Insurance and Pension Editors (NAIPE) in Lagos, Mr. Raphael Akomolede, Finance Department, gave insights on the position of Leadway regarding the implementation of the IFRS 17.
He said the company has completed solution design which takes care of Gap Analysis, Financial and Operational Impact Assessment; Designed Future State of Finance Process/Technology Gap Analysis; Development, Documentation and Review of Target Operating Model; Preparation of Technical documents and Reviews and Vendor Selection for IFRS 17.
He said presently, the relevant departments of the company are working simultaneously on System testing and Implementation (pre and post); Review and produce 2021 and 2022 Financial positions; produce interim IFRS 17 compliant financial statements including transition disclosure.
Speaking on the problem with current IFRS 4, he said the IFRS 17 replaces the IFRS 4 – an interim standard that allows insurers to use local Generally Accepted Accounting Principles (GAAP) to measure insurance contracts; no single way to account for insurance contracts; existing accounting makes it hard for investors to see which groups of contracts are profit-making and which are not.
The impact of IFRS 17, according to him include improved comparability for the first time; relevant and updated measurement of insurance contract liabilities; a more intuitive presentation of financial performance and position; enhanced disclosure and transparency and a clear distinguishing of insurance activities from investment activities.
While commending the National Insurance Commission (NAICOM) for the Roadmap for the implementation of IFRS 17 for the insurance industry in Nigeria, he said the Commission is working seriously since 2019 towards ensuring the full adoption of IFRS 17 in the Nigerian insurance industry.