Muscat: A workshop was held on Tuesday to provide updated information on the latest accounting practices, the new standards issued by the International Accounting Standards Board (IASB) and the new standard IFRS 17 "Insurance Contracts", which was issued in May 2017 to replace IFRS 4 issued by IASB in 2004.
The Capital Market Authority (CMA) organised the workshop at the Businessmen’s Hall in collaboration with KPMG. The workshop was presented by Paul Callegham, Yousuf Hassan and Asad Irshad, in the presence of Sheikh Abdullah Salim Al Salmi, Executive President of CMA, and officials from CMA, Muscat Securities Market (MSM), Muscat Clearing and Depository Co. (MCDC), and representatives of insurance companies and brokers.
The presenters of the workshop said the objective of the new standard was to provide a unified standard of accounting to all insurance contracts including reinsurance contracts, with the potential of comparison for the interest of investors and insurers.
The new standard would assist users and analysts of financial statements in understanding the accounting treatment of insurance contracts, risks insurers are exposed to and the impact on the profitability and financial positions of such companies.
It also increases comparability between insurance companies, and between insurance and other areas of the financial industry, which would ease the takeover and acquisition activities and increase competitiveness to attract capital investments and gain the confidence of investors.
The presentations reviewed the challenges companies are facing while implementing the new standard as it provides a radical change in the accounting practices coupled with new terminology, in addition to operational challenges in the implementation of the new standard, including upgrading the systems of the company.
The workshop emphasised the importance of insurers in preparing for the implementation of IFRS 17 by reviewing the processes needed to be ready for implementation in 2021 by providing the required resources for the transition. The same requirements also apply to regulators and supervisors.
IFRS 17 would be implemented on January 1, 2021, and would be mandatory for all insurance companies. Early implementation before 2021 is possible provided IFRS 9 “Financial Instruments” is implemented, as well as IFRS 15 “Accounting revenues from contracts with customers.”