CMA Prepares the Companies for Implementation of IFRS 17 “ Insurance Contracts”
The Capital Market Authority has issued a circular to all insurance companies and Oman Reinsurance Company urging them to prepare for implementation of IRFS 17. The circular contained detailed description of the phases the companies will adopt to get ready for implementation of the new accounting standard in 2021.
CMA conducted a workshop on 17 May 2018 for insurance and reinsurance companies to acquaint with the latest accounting practices in financial reporting and to introduce the new standard issued in May 2017 by the International Accounting Standards Board (ISSB). The new standard will replace IFRS 4.
The circular recommended to the companies to execute three phases to assimilate IFRS17 on insurance contracts.
The first phase is to conduct a gap analysis in respect of financial and operational impact of implementation of IFRS 17 instead of IFRS 4. The report on the gap analysis to be submitted to CMA. This phase will be from September to end of December 2018. The second phase relates to design of internal rule and processes to cope with IFRS 17 with regard to accounts, statements and other requirements etc. This phase will also include developing detailed plan with timelines for its implementations considering the results of the previous phase. This phase will be from January to December 2019.
The third phase includes commencement of empirical implementation of IFRS 17 “Insurance Contracts” and evaluation of the results. Implementation will be parallel with the existing system with evaluation of impact of implementation. Proposed period of implementation will be throughout 2020.
The object of implementation of IFRS 17 is to provide unified standards for accounting of all insurance contracts including reinsurance contracts allowing comparability for the benefit of investors and insurers as the new standard will assist investors and users and analysts of financial statements understand accounting treatment of insurance contracts and the risks insurance companies are exposed to and their impact on the profitability and financial position of such companies and enhances the comparability of financial reports among the companies and financial markets around the world. Such comparison would ease merger and acquisition activities and enhance competition to attract capital investments and boost investors’ confidence.
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