IFRS 17: understand the changes, mitigate the impacts and seize the opportunitiesBusiness advisory
IFRS 17: Impacts and Opportunities
Audit firms must increase their awareness of the financial and operational impacts of IFRS 17 on the insurance industry
As an Consulting Actuarial Firm, Lux Actuaries, are engaging with clients, most of which are insurance companies, in the transition to the new accounting standard. There are still many accounting queries posed that require accounting experts working together with actuarial experts.
Shivash Bhagaloo, Executive Director of Lux Actuaries and Consultants gave a presentation to the TGS Audit Interest Group about the opportunities and challenges around implementing the new standard, IFRS17.
From 2023 Q1 onwards all insurers will come under significant pressure to produce dual accounts, specifically the IFRS 17 trial balance, general ledger and disclosures.
Your firm may have to upskill to become an expert in these IFRS changes so that, as TGS, we can present ourselves regionally as a joint actuarial/accounting offering assistance to medium to small companies.
Impacts of IFRS 17
How can your firm provide comprehensive IFRS 17 support for your clients?
IFRS 17 is a new international accounting standard that aims to provide a consistent and transparent framework for insurance contracts. The standard replaces the previous standard, IFRS 4, and requires insurers to report their insurance contracts in a more comprehensive and detailed way.
The impacts of IFRS 17 on accounting and auditing firms are significant and have increased the complexity of reporting. IFRS 17 introduces new concepts, definitions, and calculations than those required by IFRS 4. Accounting and auditing firms will need to invest in training and resources to understand and apply the new standard.
IFRS 17 requires significant changes to financial statements, including changes to the balance sheet, income statement, and cash flow statement. TGS member firms providing accounting and auditing firms that will need to ensure that their clients are prepared to make these changes.
IFRS 17 requires insurers to collect and report more detailed data on insurance contracts. Accounting and auditing firms will need to ensure that their clients have the necessary data and systems in place to comply with the standard.
IFRS 17 aims to increase transparency and comparability in the insurance industry. Accounting and auditing firms will need to ensure that their clients are able to provide clear and comprehensive disclosures.
Opportunities surrounding IFRS 17
The implementation of IFRS 17 will require significant effort and resources from insurers and therefore lead to an increased demand for service as clients seek assistance in complying with the new standard.
Accounting and auditing firms will be able to develop new service offerings, such as data analytics and technology solutions, to help clients comply with IFRS 17.
Firms that are able to help clients successfully implement IFRS 17 may be able to build stronger and more long-lasting relationships with their clients.
While the implementation of IFRS 17 presents significant challenges for accounting and auditing firms, it also presents opportunities for firms to expand their service offerings and strengthen their relationships with clients.
TGS working together to support global clients with IFRS 17 implementation
Where the aim is to create consistency in financial reporting, the initial stages are increasing complexity and chaos. Change is always difficult but with the right help it can be less of a nightmare.
IFRS17 is already here (the deadline for implementation has already been extended twice) and many firms and their clients are not ready.
Why? Because it’s new and people are resistant to change. People need to think differently: auditors and actuaries now have to work together, teams have to be trained to implement the new regulations. Transition periods will add to costs.
Different countries are faster down the learning curve and, often, the senior managers in your client companies have to be convinced that they need to adapt to the change.
The message is simple. TGS network members are engaging with their clients now to get them to work towards introducing IFRS17 principles, procedures and processes.
If you would like help to help your clients implement IFRS17, sign up for one of our training sessions.
All you need to know to effectively implement IFRS17