Abstract
The purpose of this research is to assess the changes introduced by International Financial Reporting Standard 17: Insurance Contracts (hereafter IFRS 17) compared to the current accounting model for short-term insurance contracts in South Africa. Short-term insurance contracts, as they are known in South Africa, are the same as non-life insurance contracts in terms of the International Accounting Standards Board’s (hereafter IASB) insurance accounting terminology. The first part of the research describes the current accounting model, while the remainder of the research analyses IFRS 17 and its application to financial reporting for non-life insurance contracts using the simplified measurement approach of IFRS 17. Phase I of the IASB’s insurance project resulted in the issuing of IFRS 4 Insurance Contracts (hereafter IFRS 4) in 2004. IFRS 4 established definitions, selected specific accounting policies, the requirements for changing those policies and disclosure requirements for issuers of insurance contracts. IFRS 4 was issued as an interim standard and did not establish any recognition and measurement principles for insurance contracts. Consequently, South African short-term insurers adopted an accounting model that included IFRS 4, Circular 2/2007, the Financial Sector Conduct Authority’s (hereafter FSCA) statutory reporting guidance and Advisory Practice Note (APN 401). Circular 2/2007, which was issued by South African Institute of Chartered Accountants (hereafter SAICA) in 2007, provides accounting guidance for the recognition and measurement of short-term insurance contracts. The FSCA’s reporting framework provides presentation guidance, while the ShortTerm Insurance (hereafter STI) Act’s Board Notice and APN 401 provide valuation guidance for short-term insurance liabilities. These pronouncements constitute the current accounting model for short-term insurance in South Africa. ..
M.Com. (International Accounting)