Convergence with IFRS may result in key changes to how Indian insurance companies currently account for their business operations. Ernst & Young has conducted an IFRS survey across the sector.
The complexity of the convergence process is further increased by the fact that the IFRS standards most relevant for the insurance companies, IFRS 4: Insurance Contracts & IAS39: Financial Instruments-Recognition & Measurement, are also being revised.
The replacement standards (IFRS 4 Phase 2 & IFRS 9) are not expected to be applicable until at least 2013.
Therefore, as insurance companies make significant investments in IFRS convergence, they will have to go through another round of significant accounting changes, once the revised accounting standards are out.
The objective of this survey is to get a perspective of the key challenges in IFRS implementation as perceived by the insurance sector.
The effort will be to channel the feedback received into the various policy making initiatives that are currently in progress.
In the survey, we give you results of the feedback received from 16 insurance companies (11 life insurance and 5 general insurance) to which we had reached out.
The key questions covered in our survey were:
Apart from the statutory requirement what level of benefit do you perceive for your organization in implementing IFRS?
How high a priority as a project do you perceive convergence to IFRS (IND-AS) for your organization?
Will you be presenting comparatives which would require a 1 April 2011 transition date?
How would you rate the difficulty of conversion to IFRS (IND-AS) in specific areas on a scale of 1 to 5 (5 being the most difficult)?
What is your preparedness for reporting under IFRS converged standards (IND-AS) in India?
Do you think your company has skilled resources for converging to IFRS (IND-AS)?
How do you intend to run the IFRS convergence (IND-AS) project at your company?
To what extent do you think your IT systems will require modification for your company to move to IFRS (IND-AS)?
Outside of the Financial Reporting function, what level of awareness on IFRS (IND-AS) would you perceive exists across your organization?
According to you, which of the following represents the most significant hurdle to converge to IFRS (IND-AS)?
As IFRS is principles based, what kind of regulatory direction on accounting would you prefer upon convergence in India?