25 Sep 2022, 19:04

Financial statements of insurance industry need to be prepared in line with IFRS

DHAKA, Sept 25, 2022 (BSS) - Speakers at a seminar today said that financial reporting in the insurance sector need to be done in accordance with the International Financial Reporting Standards (IFRS) since Bangladesh is in a critical juncture for graduating to a middle income country by 2026.

The Institute of Chartered Accountants of Bangladesh (ICAB) being the premier accountancy body in Bangladesh is ready to help this transition.

Experts exchanged these views at a seminar on "IFRS 17-Insurance Contracts: Overview, Implementation Challenges & Way Forward" organized by the ICAB today held at a city hotel, said a press release.

IFRS 17 is an International Financial Reporting Standard that was issued by the International Accounting Standards Board in May 2017.

Mohammad Jainul Bari, Chairman, Insurance Development and Regulatory Authority (IDRA) spoke on the occasion as the chief guest while Md. Shahadat Hossain, President of ICAB, delivered the address of welcome.

Humayun Kabir, council member and former president of ICAB moderated the session. ICAB vice president Fouzia Haque delivered the closing remarks.

Wasequl Huq Reagan, partner, Mahfel Huq & Co., Chartered presented the keynote paper. ICAB CEO Shubhashish Bose gave the introductory remarks.

Chairmen, managing directors, chief executive officers, and directors of life and non-life insurance companies participated in the seminar and exchange their views.

Speaking on the occasion, Mohammad Jainul Bari said that the IDRA would pay more attention to the compliance with IFRS 17. As soon as this standard becomes effective from next year, insurance companies in Bangladesh need to prepare their financial statements in accordance with such standards.

The IDRA will prepare an action plan to implement this standard as soon as it becomes effective in January next year. He sought the cooperation of various stakeholders including ICAB and FRC in implementation of IFRS-17: Insurance Contracts.

Jainul said full compliance with 'IFRS 17: Insurance Contracts' will increase transparency and accountability in the insurance sector of the country and enable companies to gain public trust as well.

He informed that the insurance law was enacted in the country in 2020. "IDRA is working on making the regulations to implement this law.
However, IFRS 17 will help bring about fundamental changes in the insurance sector. There are challenges in its implementation. So, all should work together to address the issue."

ICAB President Md. Shahadat Hossain said that the insurance companies are the large investors in the financial markets. "So, the growing linkage between the insurers and the banks is considered as safeguard of financial stability of the country,"

He said that the transparency delivered by accounting standards in this sector is a crucial ingredient for sustainable growth. 

The International Accounting Standards Board (IASB) has issued "IFRS 17 Insurance Contracts" which is going to be effective from January 1, 2023 for annual reporting periods beginning on or after January 1, 2023, with early adoption permitted in certain circumstances.

Shahadat also said that IFRS 17: Insurance Contracts represents a complete overhaul of the accounting for insurance contracts. It will increase the transparency of insurers' financial positions and performance alongside the comparability of their financial statements with other insurers.
The standard will ensure the entities providing relevant information which faithfully represents the recognition, measurement, presentation and disclosure of principles for insurance contracts within its scope, he further said.

The ICAB President said such 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.

The keynote presenter Wasequl Huq Reagan said that it took 20 years to issue the IFRS 17: Insurance Contracts highlighting the complexity of the standard and overcoming many challenges posed by the interim standard IFRS 4. 

The IFRS 17 ensures more transparent and comparable financial statements. It permits 3 models for measurement of insurance contracts liability which are building block approach or general measurement model (default model), premium allocation approach (PAA) and variable fee approach (VFA).

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