Ahead of the 2023 date of transitioning to International Financial Reporting Standard (IFRS) 17, stakeholders in Nigeria have called on government to address prevailing bottlenecks to ensure smooth implementation.
The called was made in Lagos at a Thought Leadership Breakfast Session organised by Pedabo Audit Services and chair by the National Insurance Commission (NAICOM)
At the event, tagged “An Insight into the New IFRS 17 and its Impact on the Insurance Business,” stakeholders raised concerns over the loopholes in Nigeria’s approach, stressing that the approach has many implementations for the country, especially the insurance sector.
While the event was declared opened by Albert Folorunsho, Managing Consultant, Pedabo and monitored virtually by journalists, experts at the event said while the efforts being made by the National Insurance Commission (NAICOM) were laudable, there are concerns and implications that the country must pay attention to.
They said 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 remain critical if the initiative will succeed in Nigeria.
While 1 January 2023 is the transition date, 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 and this is broken down in phases into pillars 1 to 5 with pillar 1 having commenced 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,” noted that 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 are being engaged, warmed related companies operating in the country to use the transition phase wisely as the Commission would not tolerate failure and weak implementation by companies.
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, there was 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 current figure. That is indeed a huge task ahead of them.
He noted that there was 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 smooth transition, saying that while there were gaps in previous standards, fine-tuning proposed standards remain critical.
While the previous standards had variety of treatments, leading to inconsistencies as well as difficulty of having a consistent approach or constant framework on treatment for some insurance contracts, he noted that there are prevailing concerns on estimation of cashflows for long duration contracts.