Bangladesh is in a critical juncture for graduating to a middle-income country by 2026 and it is imperative that financial reporting in the insurance sector is done in accordance with the International Financial Reporting Standards (IFRS) to ensure financial transparency, said experts.
They came up with the remark at a seminar titled ‘IFRS 17-Insurance Contracts: Overview, Implementation Challenges & Way Forward’ organised by the Institute of Chartered Accountants of Bangladesh (ICAB) in Dhaka on Sunday.
They also said that the insurance companies are the large investors in financial markets and this is why transparency in this sector is a crucial ingredient for the sustainable growth of the country.
According to the participants, the Financial Reporting Act 2015 requires that financial statements of public interest entities (PIE), to which the insurance industry belongs, should be prepared in accordance with IFRS.
ICAB being the premier accountancy body in Bangladesh is ready to aid the transition to ‘IFRS 17: Insurance Contract’ to play a pivotal role in the successful implementation of this standard in Bangladesh, they said.
Mohammad Jainul Bari, Chairman of Insurance Development and Regulatory Authority (IDRA) graced the occasion as the chief guest while Md Shahadat Hossain, President of ICAB delivered the welcome address.
Mohammad Jainul Bari said, “Insurance Development and Regulatory Authority will pay more attention regarding compliance with IFRS 17. As soon as this standard becomes effective next year, insurance companies in Bangladesh will need to prepare their financial statements according to this standard.”
IDRA will prepare an action plan to implement this standard as soon as it becomes effective in January next year, he said.
He sought the cooperation of various stakeholders including ICAB and FRC in the implementation of IFRS 17.
“Full compliance with IFRS 17 will increase transparency and accountability in the insurance sector of the country and enable companies to gain public trust as well,” he added.
He informed that in the year 2010, the insurance law was enacted in the country and IDRA is working on making the regulations to implement this law.
However, he believes that IFRS 17 will help bring about fundamental changes in the insurance sector. There are challenges in its implementation, he said adding, all should work together to address the issue.
Md Shahadat Hossain said, “IFRS 17: Insurance Contracts represents a complete overhaul of the accounting for insurance contracts. It will increase the transparency of insurers’ financial positions and performance, and the comparability of their financial statements with other insurers.”
“The standard will ensure the entities providing relevant information which faithfully represents the recognition, measurement, presentation and disclosure principles for insurance contracts within its scope,” he added.
“Such information gives a basis for users of financial statements to assess the effect that insurance contracts have on the entity’s financial position, financial performance and cash flows,” he further said.
Md Humayun Kabir, Council Member and Past President of ICAB moderated the session while ICAB Vice President Fouzia Haque delivered the closing remarks.