New accounting standard

THE INSURANCE INDUSTRY in Barbados and the region should prepare for significant impact from a new accounting standard.

Recently professional services firm PricewaterhouseCoopers gave notice of the pending introduction of International Financial Reporting Standard (IFRS) 17. Now, the Association of Chartered Certified Accountants (ACCA) is also highlighting the importance of the provision.

ACCA’s head of corporate reporting Richard Martin said it was a “significant moment” when the International Accounting Standards Board’s project on insurance accounting “comes to fruition after 20 years of development”.

“Those many years have been taken up with a fundamental examination of how insurance business could be best accounted for and extensive input from the insurance industry on how it can be implemented in a practical way,” he said.

“Existing insurance accounting treatments around the world are very variable and none are the same as IFRS17. They will by 2021 be replaced by a consistent treatment in all countries using global standards. The scope of this standard is limited because it applies only to the relatively restricted number of insurance companies, but they do form a very significant sector in the economy.”

He added: “But for those companies the impact will be very significant – both in terms of the changed accounting numbers that they will report and in terms of the data that may need to be assembled. Investors and other users of those financial statements will also have to adapt to the new numbers.”

Martin said despite the long development period for IFRS17 “not all parties may be content with all aspects of the new standard”. However, he said its “consistent accounting treatments will be a major advance, and the imperfections perceived by some are an inevitable price that has to be paid”. (SC/PR)