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Concerns as FG insists on implementation of IFRS 17

By Kingsley Jeremiah, Abuja
22 November 2021   |   4:03 am
The National Insurance Commission (NAICOM) has insisted that there is no going back on the implementation of the International Financial Reporting Standard (IFRS) 17 in 2023 as stakeholders raised concerns over loopholes in Nigeria’s approach.

The National Insurance Commission (NAICOM) has insisted that there is no going back on the implementation of the International Financial Reporting Standard (IFRS) 17 in 2023 as stakeholders raised concerns over loopholes in Nigeria’s approach.

Stakeholders, who gathered at a Thought Leadership Breakfast Session organised by Pedabo Audit Services on the IFRS 17, which was opened by Managing Consultant, Albert Folorunsho, and monitored virtually by The Guardian noted that while the efforts being made by the National Insurance Commission (NAICOM) were laudable, there were concerns the country must pay attention to.

There were also concerns of data, especially the current state of data in the sector, the investment required to acquire data, the security of the data, integrity, storage and the reliability of the data as well as the complex computation required.

IFRS 17 is expected to change the accounting system for all entities that issue contracts within the scope of the standard for insurance contracts, with January 1, 2023, as the transition date but early adoption is permitted by the International Accounting Standard Board (IASB).

NAICOM has designed a national road map towards the implementation of the standard in Nigeria, broken down into phases. There are pillars one to five with pillar one having commenced in January 2020.

NAICOM’s Director of Supervision, Barineka Thompson, who spoke on behalf of the Commissioner for Insurance, Sunday Thomas, at the event tagged ‘An Insight into the New IFRS 17 and its Impact on the Insurance Business’, said there was no going back on the implementation of the standard on January 1, 2023.

Thompson, who insisted that the transition process remained on track as stakeholders were being engaged, warned related companies operating in the country to use the transition phase wisely as the Commission would not tolerate failure and weak implementation.

The Managing Partner at Pedabo, Ajibade Fashina, noted that with concerns over data-related challenges and other issues that may arise from the implementation of the IFRS 17 and said there was a need for auditors to understand the task ahead.

Fashina said: “They have a lot of work ahead; talking about financial statements, which would now double the current figure. That is indeed a huge task ahead of them.”

He noted that there was a need for a risk-based approach to ensure control over data while engaging the modalities for estimates, capacities and competencies of the consultants, “I will advise that auditors should be involved during the transition process. This will avoid waste of time during the final audit,” Fashina said.

Nosa Ogbebor, Senior Manager at Pedabo noted that there are a lot of estimates, assumptions and issues related to feasible practicalities of the IFRS 17 as stakeholders said automation of systems and processes were needed for the success of the implementation.

He noted that data may remain a critical bottleneck, adding that the current system architecture in the industry, accounting policies that aid and guide the implementation, capacity development and training remained sacrosanct for a successful implementation.

Ogbebor also raised concerns over the level of investment that would enable a smooth transition, saying that while there were gaps in previous standards, fine-tuning proposed standards remained critical.

While the previous standards had a variety of treatments, leading to inconsistencies as well as the difficulty of having a consistent approach or constant framework on treatment for some insurance contracts, he noted that there were prevailing concerns on the estimation of cash flows for long-duration contracts.

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