Understanding the implementation process in preparation for IFRS 17 : an auditors' perspective

Abstract

Purpose: The objectives of the dissertation were to understand the implementation procedures an insurance company needs to conduct in order to implement IFRS 17 and its impact on such entities. Design: The appropriate research approach to satisfy the identified objectives was through a qualitative one. Seven interviews with audit firms who are licensed to provide services to insurance companies were conducted, together with an unstructured discussion with a CFO of a general insurance company Findings: IFRS 17 was needed to replace IFRS 4 as it lacked comparability and measurement requirements to record insurance contracts. It was observed that auditors can assist their non-audit clients in the implementation process, but not their audit clients due to independence restrictions. The implementation should commence with a BIA, where the shortcomings of the current system emerge. The findings also express the views of the interviewees on the impact of IFRS 17 in terms of system and IT requirements, data, financial reporting and disclosure requirements, personnel and costs. Conclusions: The above support the fact that insurers should start gearing their entities for IFRS 17 now rather than later. The interviewees feel that the local industry is taking the implementation process lightly and that they are underestimating its impact. Value: This study provides an insight on the implications IFRS 17 will have on the local industry. This dissertation may be used for further research on this subject matter, given the lack of research in insurance accounting.