The IASB has published 'Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts’ which makes narrow scope amendments to IFRS 4 'Insurance Contracts' ('the Amendments'). The Amendments provide temporary accounting solutions, for entities that issue insurance contracts, for the practical challenges of implementing IFRS 9 'Financial Instruments' before the forthcoming insurance contracts Standard.
The IASB has issued the Amendments to address the temporary accounting consequences of the different effective dates of IFRS 9 'Financial Instruments' and the anticipated new insurance contracts Standard. The new insurance contracts Standard is yet to be finalised and will have an effective date no earlier than 2020. This means its mandatory effective date will be after the 2018 effective date of IFRS 9.
As companies that issue insurance contracts will be affected by both IFRS 9 and the new insurance contracts Standard, there was considerable concern over the practical challenges of implementing these two significant accounting changes on different dates. Further concerns were raised over the potential for increased volatility in profit or loss if IFRS 9's new requirements for financial instruments come into force before the new insurance accounting rules.
To find out more, please contact Athina Moustaki.