In case you haven’t heard, there’s a big change in accounting standards getting ready to take place. Around about 2014, there will be “a single set of high-quality, understandable and International Financial Reporting Standards (IFRS) for general purpose financial statements.”
The change, driven by the Securities and Exchange Commission, is a big deal because it means that businesses will finally be using one consistent global standard to measure and report on their financial performance. It’s good for investors because they’ll be able to more easily compare the operations of global players, and, when all is said and done, it will be good news for global finance and accounting departments since they’ll only have to prepare one set of financial statements instead of the multiple iterations they do now.
The change, as detailed in IFRS 4, will have a big impact on insurers in their accounting for insurance contracts and disclosure requirements. But while it’s tempting to think that the impact of the IFRS standardization is confined to the folks donning green eyeshades as they sit hunched making journal entries in musty ledger books, the new standards represent one of those company-changing events that extend beyond the F&A team.
Insurance IT organizations will be tapped to replace or upgrade legacy accounting systems, plus what could be really messy data and format conversions needed to support the new standard spanning business processes ranging from data entry and statement preparation to commissions payment, audit, and of course, compliance reporting.
Not surprisingly, the accounting industry is all over this, but to date, I haven’t heard anything from carriers or producers and only one small peep from a tech vendor wondering about the change. Is it because insurance IT is instead focused on compliance with the Medicare, Medicaid and SCHIP Extension Act? (I don’t think so...)
For more information about the change, the big auditors like PWC and Ernst & Young have developed very readable information about the GAAP to IFRS switch on their Web sites, including timetables for compliance.
Tell us what you’re doing!
We’re all over this!
We’ve heard about this, but we’ll worry about it when the standard gets closer to finalization
This is news to me!
Ellen Carney is a senior analyst with Forrester Research. She focuses on how the financial services industry researches, procures and deploys business technology, and is responsible for developing the global forecasts for IT budget and spending forecasts for insurance and banking. She can be reached at firstname.lastname@example.org.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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