Matthew Otoijagha
The National Insurance Commission (NAICOM) has stated its roles and those of underwriters in the adoption of the International Financial Reporting Standards (IFRS) .
The Director, Inspectorate, NAICOM, Barineka Thompson, who listed the roles, noted that insurance operators are to engage on awareness training for senior management and members of the board of their directors; develop road map for adoption and follow -up action.
The Director also cited the development of policies, procedures and governance structures for implementation as well as, perform an impact assessment to determine the high level implications of applying the new C&M requirements, including potential accounting mismatches and resulting volatility of IFRS 9 and carry out predominance test and present result to the board of directors for decision on choice of option.
According to NAICOM, operators are also to engage on classification and measurement of financial assets, develop test, apply and validate new impairment model based on expected credit losses rather than incurred losses.
In addition, operators are also to appraise new hedge accounting criteria, expected to be of limited interest to insurers; address organizational responsibilities aligning actuaries, risk and accounting identity shared risk and actuarial data and conduct parallel testing and pilot phases for increased efficiency.
Barineka said they are to also consider interpretation of new requirements and assess implications of having to apply new impairment rules to all financial assets
According to him, “Insurers should already have prepared themselves for IFRS 9 before 1 January 2018 against year-end financial statements and if relevant, have performed and concluded all testing and disclosure requirements.
“The tax impact of any accounting decisions, judgments and transitional adjustments arising from IFRS 9 will need to be understood and assessed alongside those arising from IFRS 17 to fully understand the overall impact, including on tax profile and volatility. File relevant report with the regulator for review and assessment,” he said.
On the roles of NAICOM, he said the regulator has to engage on sensitization workshop for key stakeholders; issuance of supervisory guidance to operators in the event of observed apathy; conduct training of supervisory staff and have continuous interaction with operators for enhanced quality of financial reporting of IFRS 9.