• Thursday, May 30, 2024
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IFRS 17: Insurers struggle as 2 months extension deadline for compliance nears

IFRS 17: Shortage of actuaries, auditors impedes insurers’ compliance

The two months extension deadline granted listed insurance companies to submit their 2023 Audited Financial Accounts in line with International Financial Reporting Standard (IFRS) 17 is ending in days without any company having secured approval yet.

“No company has gotten approval up till now because we are all still struggling, according to the Chief Financial Officer (CFO) of one the big insurance companies.

According to the CFO, it is still a very big challenge to all operators, even the process owners, external auditors, actuaries as well as finance staff of insurance companies and the National Insurance Commission (NAICOM).

Insurance companies statutorily have on or before 31st March to submit their full year audited financial accounts to the NGX Limited and the Securities and Exchange Commission (SEC).

But as the deadline approached, the insurance regulator, the National Insurance Commission (NAICOM) secured two months extension of submission for the insurance companies and this is meant to end 29th May 2024, precisely two weeks from now.

The CFO also informed that this year as well, insurers are adopting Internal Control over Financial Reporting (ICFR) and all entities are supposed to adopt it. Not only that, there is IFRS 9 to be adopted by those who were yet to adopt it, and it has to be adopted alongside IFRS 17.

“These are the challenges confronting the insurance industry and that is why up till now, no insurance company has been able to secure approval for its audited financial report for 2023, the CFO said.

“NAICOM has not given approval to any company’s account and even they themselves are still grappling with understanding the issues around IFRS 17”.

Industry egg heads had lamented shortage of consulting actuaries and auditors familiar with the new International Financial Reporting Standard (IFRS) 17 in Nigeria, as major bottleneck slowing insurance companies’ transition and compliance.

This is as insurance companies struggle for the services of few available IFRS 17 Actuaries and Auditors in Nigeria, even as they had gone as far as Kenya and South African markets to get consultants.

Moruf Apamapa, managing director/CEO, NSIA Insurance Company Limited said the transition to IFRS 17 comes with challenges across board.

He stated that before this time, NAICOM had written to SEC and NGX to allow publicly quoted companies extra time to submit their 2023 annual returns and 2024 first-quarter returns following perceived bottlenecks with the transition process.

“We do not have enough resources in the country to be able to manage the process, and even the regulators themselves are contending with few available resources within their system. So, IFRS 17 is more than a simple accounting. You have limited resources in terms of actuaries in the market, so we had to rely on actuaries from South Africa and Kenya to meet up”.

“So, there is limited resource personnel who are attending to all of us, and this transition from four to 17th standard poses challenges, he said.

Mayowa Adeduro, managing director/CEO, of Tangerine Insurance who responded to questions on the state of implementation said “Quite several practitioners especially insurers and reinsurers are yet to render accounts and returns to primary regulators NAICOM and ditto to secondary regulators SEC and NGX.” He said the major challenge has been the adoption of IFRS 17 presentations of accounts.

“Capacities of external audit firms have been thinned out because most financial institutions have December 31st Year End reports. There are limited resources available to companies and firms on IFRS 17 audit and presentations of accounts.

Adeduro also said, it has been quite excruciating for practitioners and I think our regulators are quite appreciative of the challenges hence there has not been threats of sanctions to companies for delayed report.

Emmanuel Otitolaiye, chairman of the Accounting Technical Committee of the Nigerian Insurers Association (NIA” had expressed concern about meeting up with the deadline for filling their accounts with regulators because of the challenges of first-time adoption of IFRS 17 as of December 31, 2023.

“The combined effect of these on the reporting chain – management, auditors, actuaries and all assurances providers are that more time and resources would be re­quired to cope with the expanded work even within a limited time frame, hence the potential inability to meet up with the deadline.”

Otitolaiye, stressed the impli­cations to include the inability of companies and regulators to have early closure on 2023 financial reporting activities. “The investing public may also not be able to make prompt decisions on their investment.”