Mumbai, June 29, 2017
Corporate Affairs ministry laid down the road map for implementation of IndAS for insurance sector
The Insurance Regulatory and Development Authority of India (Irdai) has deferred the implementation of Indian Accounting Standards (IndAS) by a period of two years and it will now be implemented by 2020-21.
The board of authority, after its meeting on May 31, noted the peculiarities of the insurance sector, particularly the fact that India does not have a standard equivalent to IAS39 on Financial Instruments: Recognition and Measurement.
They came to the conclusion that the implementation of the IndAS in the present form will lead to the valuation of assets at fair value or market value, however, liabilities will continue to be valued as per the existing formula based approach. Hence, a mismatch would occur in the asset and liability valuation causing volatility in the financial statements of the insurance companies.
Furthermore, this will lead to counting of compliance cost twice. It will be counted for the first time on the implementation of IndAS and secondly, when IFRS 17 is implemented in India. The International Accounting Standards Board issued IFRS 17 insurance contracts replacing IFRS 4, which was brought in as an interim standard. The issuance of IFRS 17 had forced the Irdai to review the position in the matter of Implementation of IndAS in the insurance sector.
Earlier, the Ministry of Corporate Affairs had laid down the road map for the implementation of IndAS for the insurance sector whereby, insurers were required to prepare IndAS based financial statements for accounting periods beginning from April 1, 2018 onwards, with one-year comparatives.
[The Business Standard]