IASB to propose amendment to IFRS 17
The International Accounting Standards Board (IASB) has decide to look at an amendment to IFRS 17 Insurance Contracts, relating to the separate presentation in the financial position statement of groups that are either assets or liabilities
14 Dec 2018
When the standard was first issued in May 2017, the IASB initiated a programme of stakeholder engagement to fully understand the practical challenges of implementing IFRS 17 and to identify possible refinements to ease the burden of transition.
The board began a process of evaluating the need for making possible amendments to the standard at its October 2018 meeting.
At its December meeting the standards body discussed 13 of the 25 concerns regarding the standard that had been identified at the earlier meeting as candidates for potential amendments.
In that meeting, the board decided that any amendments should not result in less useful information for investors; disrupt existing implementation processes; and risk undue delays in the effective date of a standard that IASB said ‘is much-needed to address inadequacies in the current wide range of insurance accounting practices.’
IASB says the amendment now proposed meets those criteria.
The board’s discussions will continue in early 2019 and will be followed by a public consultation on the proposed amendment(s) before any changes are confirmed. The public consultation will include a one-year deferral of the standard’s effective date to 2022, which the board decided to propose during its November meeting.
Alex Bertolotti, IFRS 17 leader at PwC, said: ‘The IASB’s decision to potentially raise the level of aggregation for presenting insurance contracts as assets or liabilities on the balance sheet will be welcomed by many insurers.
‘The higher level of aggregation of asset or liability presentation should help to reduce some of the costs of implementation of the standard for a number of insurers.
‘The IASB rejected 11 further issues and challenges that had been raised, stating that they did not meet the IASB agreed criteria for amendment. However, the IASB has decided to discuss the questions related to the variable fee approach, along with other questions related to transition at a future meeting.
‘It is expected that there will be further discussion by the IASB of the remaining reported concerns in their board meetings in early 2019.
‘Our message to insurers is “continue full steam ahead on your projects”- there is so much to do, there is little time to do it, and given the criteria for the IASB amending the standard, we do not expect many further amendments.’
Report by Pat Sweet