On March 17, 2020, the International Accounting Standards Board (IASB) approved deferral of the effective date of International Financial Reporting Standard 17 (IFRS 17) to Jan. 1, 2023.
The key points from the IASB’s March 2020 meeting are summarized below.
Effective date
The IASB approved the staff recommendations to amend the effective date of IFRS 17 from Jan. 1, 2021, to Jan. 1, 2023. The decision was made to allow sufficient time for an orderly introduction of the amended IFRS 17 standard into legal systems around the world.
The decision to defer the effective date of IFRS 17 was additionally in part to allow smaller insurance companies and those with access to less resources adequate time to implement IFRS 17. The board also acknowledged the complexity of IFRS 17 implementation and the various levels of implementation across different sizes of insurance companies.
Additionally, the fixed expiry date for the temporary exemption to IFRS 9 Financial Instruments in IFRS 4 Insurance Contracts was deferred by one extra year so that all insurance entities must apply IFRS 9 for annual periods on or after Jan. 1, 2023. An entity can still apply IFRS 17 before the effective date but only if IFRS 9 is also applied on or before the date of initial application of IFRS 17.
The board decided not to re-expose the proposed amendments to IFRS 17
The IASB decided to target the second calendar quarter of 2020 to issue the final amendments to the standard without publication of a new exposure draft. The board accepted the staff recommendation that the proposed amendments to IFRS 17 do not differ fundamentally from the amendments proposed to IFRS 17 in the existing exposure draft. The board additionally agreed with the IASB staff that the extensive consultation process already undertaken meant it is unlikely that the board would learn anything significantly new by re-exposing the proposals.
The remaining steps to publication of IFRS 17 are translations, taxonomy and editorial team reviews of the final drafts of the standard. The IASB staff intend to send a draft of the amendments to external parties for review before finalization. This review allows external parties to report back to the staff on the clarity and understandability of the draft.
How RSM can help
The new standard introduces significant implications for operational processes, capital and strategy, as discussed in RSM’s publication IFRS 17 Insurance Contracts: Strategic and Operational Impacts.
RSM can help with understanding the technical accounting requirements, and designing and implementing new processes, controls and IT solutions. RSM can also help with IFRS 17 vendor selection, business requirements development, data gaps and data configurations required for new calculations, management reporting, financial statement presentation and disclosures.
