Auditors play a crucial role in ensuring that insurance companies comply with IFRS 17, providing an independent assessment of financial statements and processes. Their work involves verifying the accuracy, completeness, and compliance of reported figures with the new standard, which requires a deep understanding of its complex requirements.
One key responsibility of auditors under IFRS 17 is to assess the methodologies and assumptions used in measuring insurance contracts. This includes evaluating the reasonableness of future cash flow estimates, discount rates, and risk adjustments applied by the company. Auditors must ensure that these estimates are based on reliable data and appropriate actuarial models, reflecting the current fulfillment value of insurance liabilities.
Auditors also examine the calculation of the Contractual Service Margin (CSM), which represents the unearned profit of insurance contracts. They verify that the CSM is correctly determined and recognized over the coverage period, ensuring that profit recognition aligns with the delivery of insurance services. This involves detailed testing and validation of actuarial models and financial systems used in the calculation process.
Another critical area of focus for auditors is the enhanced disclosure requirements under IFRS 17. Auditors review the completeness and accuracy of the disclosures, ensuring that they provide a transparent and comprehensive view of the company’s financial position and performance. This includes assessing the quality of information related to assumptions, methodologies, and judgments used in measuring insurance contracts.
To effectively audit under IFRS 17, auditors must possess specialized knowledge and skills. Continuous training and staying updated with the latest developments in the standard are essential. Auditors often work closely with actuarial and finance teams to understand the complexities of the new standard and ensure a thorough and accurate audit.
Merit Global Training offers courses that equip auditors with the knowledge and skills needed to effectively audit under IFRS 17. These courses provide in-depth insights into the standard’s requirements, practical guidance on auditing methodologies, and best practices for ensuring compliance. For more information, visit course details at Merit Global Training here.
In summary, auditors play a vital role in ensuring IFRS 17 compliance by verifying the accuracy and completeness of financial reporting, assessing methodologies and assumptions, examining CSM calculations, and reviewing enhanced disclosures. Their expertise and independent assessment are crucial in maintaining the integrity and transparency of financial statements in the insurance industry.
