The global trend towards the adoption of IFRS is quickly gaining momentum. And it is becoming increasingly likely that the convergence of U.S. GAAP and IFRS, the effort to eliminate key differences between the two standards, will instead result in the abandonment of U.S. GAAP altogether. While IFRS may not be mandatory for U.S. SEC registrants until 2013-2015, the need to include prior years’ financial data for comparative statements makes it imperative that companies prepare for the transition now.
Adoption of IFRS by U.S. companies will bring significant and widespread changes to financial reporting and related processes. The initiative stretches far beyond accounting and how business performance is reported. It will impact how insurance products are priced, administered and maintained; how taxes are calculated; how regulators approach their solvency monitoring responsibilities; how companies assess their risks, and much more.
Adoption of IFRS also presents opportunities, as well. Companies, investors and capital markets, and regulators all stand to benefit from IFRS and its promise of improved levels of transparency and comparability and better representation of the financial performance of an organization. However, two issues stand out:
- While adoption of IFRS around the world continues, many sections of IFRS continue to be debated and developed. IFRS 4, Insurance Contracts, is in its Phase II development stage, with many key concepts such as the definition of fair value and premium recognition still far from resolution. This presents a unique layer of added complexity to insurers.
- Given the historical link between U.S. GAAP and Statutory Accounting Principals in the U.S., it is quite likely that statutory accounting and reporting will have to change as well. How it will change, and to what degree, remains to be seen.
Invotex is a leader in responding to such changes. Our unique blend of professional disciplines and experiences position us to anticipate the impact of the IFRS initiative, and to understand how organizations can best prepare for and prosper within the new environment. Our insurance professionals have diverse backgrounds in industry, public accounting and regulatory oversight. And we have in-depth experience in areas such as financial reporting, investment management, insurance administration, information technology and risk management. |
CareFirst must raise its surplus, Ulman, Danielle, The Daily Record, January 8, 2010.
Carefirst tells Maryland regulators reserve level is ‘healthy’ as is, Insurance & Financial Advisor, November 19, 2009.
Report deems surplus for CareFirst, subsidiary ‘not excessive,’ Insurance & Financial Advisor, November 5, 2009.
|
