Abstract
The International Accounting Standards Board is presently working on Phase II of the Insurance Contract project. The objective of this project is to compile a standard, based on principles, which will address accounting for various insurance contracts issued by companies and improve financial reporting comparability between companies.
This research study critically evaluates whether decision-useful information will be provided by South Africa’s large, listed long-term insurers through the use of the IASB’s building block approach proposed in Phase II, the Exposure Draft on Insurance Contracts issued in 2013. A questionnaire developed for this study was used in a comparative analysis of current financial reporting and proposed financial reporting by long-term insurers.
The findings of this research study indicate that IFRS 4 Phase II will result in the provision of decision-useful insurance accounting information. A long-term insurer’s financial reporting will be more consistent and comparable, which is aligned with the basic requirements of financial reporting. IFRS 4 Phase II will enhance comparability between various long-term insurers in South Africa. These findings support the conclusion that a move to IFRS 4 Phase II for long-term insurer financial reporting in South Africa will be beneficial to users of financial statements in making economic decisions.
M.Com. (Accounting)