IRDA likely to implement new Indian Accounting Standard in the insurance sector soon

In its recent board meeting the IRDA discussed, the status of implementation of the Ind AS in the insurance sector in India and had taken the following decisions on the matter of Ind AS.  -approval of implementation of Ind AS 109 and IFRS 17 equivalent in India simultaneously,along with other applicable Ind AS, - re-visit existing regulations on preparation of financial statements,  - direct the insurers to discontinue submission of proforma Ind AS financial statements being filed effective quarter ending 31st December, 2016 and  -to decide on the date for implementation of all applicable Ind ASs after the finalization of IFRS 17 by IASB which is expected during mid 2020.

 

Hyderabad:

The insurance regulator IRDA has indicated that Implementation of the new accounting system - the Indian Accounting Standard (abbreviated as Ind-AS)- in the domestic  insurance sector is likely happened in mid 2020.


In its recent board meeting the IRDA discussed, the status of implementation of the Ind AS in the insurance sector in India and had taken the following decisions on the matter of Ind AS.
 -approval of implementation of Ind AS 109 and IFRS 17 equivalent in India simultaneously,along with other applicable Ind AS,
- re-visit existing regulations on preparation of financial statements, 
- direct the insurers to discontinue submission of proforma Ind AS financial statements being filed effective quarter ending 31st December, 2016 and 
-to decide on the date for implementation of all applicable Ind ASs after the finalization of IFRS 17 by IASB which is expected during mid 2020.

 

It was informed that Ind AS 104 (Insurance Contracts), equivalent IFRS 4 and the latter is being phased out internationally.Hence,implementing it afresh in India now would involve avoidable cost and efforts. 


Considerable efforts would be required to implement IFRS 17 equivalent in India owing to its operational complexities.Hence, it may not be desirable to implement Ind AS 104 as an interim measure. 


In addition, implementing Ind AS 109 before IFRS 17 equivalent in India may cause volatility in the financial statements because of asset liability mismatch, Ind AS 109 and Ind AS equivalent of IFRS 17 may be implemented in India simultaneously.


The IRDA also deliberated on the various issues which need to be addressed prior to implementation of Ind AS in the insurance sector, including (i) amendments to Section 11 of the Insurance Act, 1938, (ii) re-visiting existing regulations on preparation of financial statements, (iii) life companies - separation of funds not envisaged under IFRS 17, (iv) issues unique to LIC of India pertaining to single fund of the Corporation and distribution of surplus as envisaged in LIC Act, 1956, (v) taxation matters, and (vi) changes required for various regulatory returns, amongst others.
 

Indian Accounting Standard (Ind-AS) explained 

What are IND AS?

Indian Accounting Standard (abbreviated as Ind-AS) is the Accounting standard adopted by companies in India and issued under the supervision of Accounting Standards Board (ASB) which was set up in 1977.

IND AS stands for Indian Accounting standards and are converged standards for International Financial Reporting standards (IFRS). In simple terms, Indian accounting standards came into existence to meet the requirements of IFRS.The International Financial Reporting Standards, also known by its acronym IFRS, issued by International Accounting Standard Board(IASB). are a set of global accounting standards which are already adopted by more than 150 countries across the globe.

The Government of India in consultation with ICAI decided to converge and not to adopt IFRS issued by the International Accounting standards Board (IASB).


Who has issued IND AS?

Indian Accounting Standards (IND AS) were issued by Central Government of India under the supervision and control of Accounting Standards Board (ASB) of ICAI and in consultation with National Advisory Committee on Accounting Standards (NACAS).
 

National Advisory Committee on Accounting Standards (NACAS) recommends these standards to the Ministry of Corporate Affairs (MCA). Then MCA has to spell out the accounting standards applicable for companies in India.

 

.. MCA has to spell out the accounting standards applicable for companies in India.


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