Insurance industry finds IFRS needs further embedding

News Article - 27 July 2006
Category: Business

A new survey has found that over a third of insurers believe International Financial Reporting Standards (IFRS) have improved transparency and comparability within financial reporting.

However, the study by KPMG also found that further work is required to fully embed the new accounting rules in to their business processes.

"While the insurance industry arguably faced fewer challenges than other industries in converting to IFRS, the survey has highlighted a number of issues which the industry will need to manage effectively when planning future reporting," said Hitesh Patel, financial services partner, KPMG in the UK.

"The purpose of IFRS was not to improve comparability of insurance accounting but to improve disclosures and introduce consistent accounting for insurance contracts."

According to the study 50 per cent of companies said disclosures were the biggest headache and have realised that more work is required to enhance this area of their reporting.

Determining how much detail to include in the financial reports, as well as striking the appropriate balance between qualitative and quantitative information were the main difficulties found with disclosures.

Furthermore, 70 per cent of respondents said they feel IFRS needs further embedding into their business processes "to ensure accuracy and timeliness of financial reporting".

About 50 per cent have not fully embedded actuarial changes in to core systems.

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