By LOVETH AZODO, Lagos
In a bid to get prepared for the adoption of the International Financial Reporting Standard 17 (IFRS 17) in Nigeria, the federal government has announced the inauguration of Insurance Industry Financial Reporting Working Group (IIFRWG).
The group constituted by the National Insurance Commission (NAICOM) was inaugurated today in Lagos to give advisory and consultative services for the seamless adoption of IFRS17, January 2022.
Speaking at the inauguration ceremony, the Ag. Commissioner for Insurance, Sunday Thomas disclosed that the Working Group consists of members with relevant expertise and experience of insurance business, its accounting as well as financial instruments.
“If the effective date of implementation is not shifted again, it therefore means that Nigeria has only one year to prepare for the adoption of IFRS 17. It is against this backdrop that the Commission hereby constitutes a Working Group that will help to foster the country’s adoption of the IFRS 17 in line with best practice,” he stated.
According to him, the working group will provide specialized knowledge to enhance an understanding of insurance specific issues and technical assessment of proposals.
He added that the group will advise and support the Commission/ Industry in areas like: Discuss Technical assessment and Interpretations issues arising from IFRS 17 and consider consistent application within the Nigerian insurance industry, Identification of interpretation and implementation issues on insurance specific matters and consider implementation questions raised by operators, Assist in the preparation and execution of activities that will facilitate the implementation of the adoption of IFRS 17 to mention but a few.
On IFRS 17, he said “It is instructive to note that the IFRS 17 is more than an Accounting issues, insurers will need to think holistically about the impact on their organizations.
In his optimism, the commissioner said that the IFRS 17 will have significant implications on Information Technology systems, strategic management, business processes, actuarial services, treasury and employee skills, “in all of these, there are a lot of challenges that will be faced by the insurers,” he said.
“Transition is going to be comprehensive and complex, but developing business plan before the effective date as it will affect key areas in the operational processes, system reporting, management information, compensation plan, tax and a host of other key performance indicators.”
It would be recalled that in May 2017 the International Accounting Standard Board (IASB) issued the international Financial Reporting Standard 17 (IFRS 17) Insurance Contract. This standard will replace the present IFRS 4 on accounting for insurance contracts by January 01, 2022.
Thus, beginning from January 01, 2022, all insurance and reinsurance contracts is expected to report in accordance with IFRS 17.
The objective of IFRS 17 is to ensure that an entity provides relevant information that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows.
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