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IFRS migration: NAICOM intensifies efforts

By on March 26, 2011

EFFORTS are on top gear by the National Insurance Commission (NAICOM) to enforce a seamless and cost effective transition to International Financial Reporting Standard (IFRS) among insurance and reinsurance companies in Nigeria as means to ensure compliance with the Federal Government’s directive.

The commission, as a follow up to the meeting held with chief executive officers and chief finance officers early January, 2011, extended awareness seminar to Chairmen of Audit Committees and Non-Executive Directors on how a cost effective transition could be achieved.

Speaking at the opening ceremony of the IFRS awareness seminar for chairmen of Audit Committees and non executive directors of insurance and reinsurance companies, the Commissioner for Insurance, Mr Fola Daniel, explained that the thrust of the various seminars was to ensure familiarisation of arrow heads of companies’ financial department with basic things that would ensure cost effectiveness.

According to him, the event was part of the “commission’s plan to facilitate a seamless and cost effective transition to IFRS in the Nigerian insurance industry” adding that it was a follow-up to the meeting held with chief executive officers and chief finance officer, early January, 2011 to discuss the issues in IFRS conversion and agree on how a cost effective transition could be achieved.

“There were two main outcomes from that meeting. First, it was agreed that the market should adopt common approach to IFRS provided that such option would not place any individual company or the market at a competitive disadvantage domestically and internationally.

“Second, it was agreed that an Accounting Practices Committee made up of the representative of NICOM, Nigerian Insurers/Reinsurers and External Auditors, be set up. The committee is to address all accounting issues of concern to the industry including those emerging from IFRS standard setting process”, he explained.

Explaining further, Mr Daniel said that the board of directors of each company was responsible for the financial statements issued by it. Consequently, both the transition to and sustained application of IFRS in their accounting practices should be a major item on their agenda at this time.

The decision to involve the non executive directors and chairmen of audit committee was informed by the need not only to create awareness of the implication of IFRS for financial reporting but also to acquaint them with the scale of change and the urgency  it deserved.

He added that the expectation of NAICOM was that at the end, they would have acquired sufficient level of understanding as to know what critical questions to ask and what steps to take in a bid to ensure that companies successfully transited to IFRS in their accounting practices.

“It is important to note that we are committed to supporting you in the process. For this purpose, we have set up an IFRS help desk in the Commission to address issues that companies may have in the process of transiting to IFRS. Last year, we succeeded in significantly improving the level of compliance with the Nigerian GAAP by getting some companies to amend their financial statements to reflect a standard we believed all operators should comply with, if their financials will be relevant and useful to both domestic and that significantly impacted their shareholders ance and reinsurance companies, the Commissioner disclosed that NAICOM recently released a pro formal complete financial statement for comments by stakeholders.

“The key change that the document seeks to introduce is improved financial reporting from a disclosure perspective.  We want to encourage companies to take advantage of the information in this document to improve both the presentation and disclosure of their audited financial statements.

“With regard to the financial reports for the year 2010, I want to appeal to you to ensure that lessons learnt from the processes in 2009 are reflected in 2010, including action on matters which were deferred with our agreement to 2010. Our doors are open for any area of uncertainty so that they will be cleared and agreed upon before you submit your accounts, but you must ensure you come with your Auditors.” he said.

Source : Tribune