Financial Services Ireland

Insurance Accounting Alert – IASB meeting update

Read more

At an educational meeting on Wednesday 24 October, the IASB discussed how they might evaluate at future meetings whether to make limited changes to IFRS 17 for 25 areas of concern and implementation challenges raised by stakeholders. Read on for a high level summary of proceedings, or download our more detailed analysis below.

While no decisions were made at the October IASB meeting, the group appears to be open to considering limited changes in the coming months including considering a delay to the current implementation date of 1 January 2021.

The IASB was not asked whether the standard should be amended; the IASB staff will bring papers to future meetings, with further analysis of the 25 topics, to consider whether any amendments to IFRS 17 are justified. Any amendment to IFRS 17 would be subject to due process, including development of an Exposure Draft.

Possibility for amendments

The Board members emphasised that even if individual changes met the criteria above, they would still want to consider the package of changes as a whole before concluding whether the benefits of making the changes outweighed the costs. Board members emphasised that they would not want to make any changes that violated the principles or decisions that they had made in developing the standard. Only when new information had come to the attention of the Board or staff, should changes be considered.

Topics discussed

The 25 topics included in the staff papers for the meeting cover many areas of IFRS 17 – scope, measurement, presentation, the effective date and transition – and include potential changes to fundamental aspects of the standard.

In seven of the 25 areas, the IASB staff appears to see potential for considering changes to the standard. The IASB discussion was not limited to these seven issues only, but broadly considered all topics. Read our Insurance Accounting Alert publication for more detail on these discussions and the seven areas that staff preliminarily assessed as possibly meeting the criteria for revision.

How we see it

The IASB is aware of stakeholder concerns and appears open to change the standard to resolve some of the issues raised by constituents.
The preliminary staff view does not necessarily mean that all seven areas of concern will change – just that any of these areas are topics that the Board may wish to consider re-opening the standard for on the basis of the criteria agreed at the meeting. The IASB staff emphasised that meeting the criteria was a necessary, but not sufficient, condition to justify a change.
The Board appears to be open to also consider the possibility of changes to some of the issues outside of the seven identified by the staff.
If the Board were to decide to delay the IFRS 17 effective date, but not IFRS 9, insurers are likely to be concerned by the need to apply IFRS 9 in 2021, i.e., making major changes to the asset and liability sides of the balance sheet a few years apart. This could become one of the more contentious areas of debate.
The uncertainty arising from any changes to IFRS 17 and its effective date could impact IFRS 17 implementation programmes already underway and may affect project timelines. It is important that entities assess the impact on their ongoing IFRS 17 projects to prioritise work packages and develop decision points in the next few months at which they will evaluate the timing of implementation efforts.

Ciara McKenna

FS Partner, Assurance, Insurance

Ciara's Full Profile

Growth

Insurance Accounting Alert

IASB considers conderns and implementation challenges raised by stakeholders on IFRS 17

Download brochure