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IFRS 10 Consolidated Financial Statements - What IFRS 10 means for insurers - EY - Global

IFRS 10 Consolidated Financial Statements

What IFRS 10 means for insurers

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What does an insurer's consolidation roadmap look like?

What does an insurer's consolidation roadmap look like?
Insurers with interests in funds will be required to re-perform their assessment of whether a fund should be consolidated.

Planning for the effective date

Applying IFRS 10 will require significant time and effort. Insurers should plan accordingly and begin the process early, considering the items below:

  1. Early assessment of the impact of IFRS 10 enables insurers to make strategic decisions about the structure of the group, taking account of the tax and regulatory implications. They have limited opportunity to ensure that new contracts entered into are in line with the group's overall strategy. Insurers will have the opportunity to consider existing arrangements to determine whether potential changes are required.
  2. New processes and systems (or modifications to existing processes and systems) may be needed to gather information (such as contract agreements and other data related to investments).

Impact of new consolidation standard on Insurers

Impact of new consolidation standard on Insurers

What does an insurer's consolidation roadmap look like?

This information is necessary to assess the impact in advance of implementation and to make judgements on an ongoing basis. The process of identifying the population of potential investments that require reconsideration could be a time consuming and difficult task.

In addition, facts and circumstances that impact the assessment of control may change over time and processes would need to be adjusted accordingly.

How can we help?

We have an experienced team of accounting, IFRS adoption, finance process, tax, and IT professionals to advise you in assessing how IFRS 10 and IFRS 12 will affect you and raise your level of preparedness.

In the following chart, we outline the challenges that are likely to be faced when preparing for IFRS 10 and IFRS 12 adoption, and describe how we may be able to help.

How EY may be able to help

Issues and stepsHow EY can help
Understanding the technical accounting requirements of IFRS 10 and
  • Design and help deliver training sessions for your personnel on the accounting and financial statement disclosure implications of IFRS 10 and IFRS 12 respectively
  • Share insights and updates from the IASB and evolving market views
Determining the impact of IFRS 10 and IFRS 12 on the financial statements

Advise you on:

  • Gathering the necessary scoping information to implement the new standards, including providing assistance with identifying the population of entities to be considered
  • Identifying shortfalls in available information to adopt the new standards
  • Assessing the impact of implementing IFRS 10 on key financial ratios, performance measures and regulatory capital
  • Developing a process for managing the significant judgements and estimates that would be necessary
  • Identifying potential events that could trigger a re-assessment of a consolidation conclusion
  • Developing a process to embed these consolidation re-assessment triggers into the financial statement close process
Understanding the specific impact of IFRS 10 on the structured solutions business

Advise you on:

  • Evaluating existing contractual arrangements for structured entities to determine the potential impact on your business
  • The effects of IFRS 10's requirements as you design new structured trades for customers
  • Analysing tax positions of existing structured trades with your customers
Understanding how your peer group is addressing the challenges of adoption

Advise you on:

  • Provide observations of how others are approaching IFRS 10 and IFRS 12, problems they have encountered and solutions developed
  • Assist in the evaluation of your position relative to your peers by sharing with you the results of our recent survey on the expected impact of IFRS 10 and IFRS 12 on an entity's financial statement close process
Assessing the impact on your key consolidation, reporting and disclosures preparation processes

Advise you on:

  • Assessing your entity data collection and reporting processes against our leading practice model and identifying recommendations for enhancement
  • Assessing your disclosure management processes and supporting infrastructure against our leading practice model and identifying potential efficiency and quality enhancements
  • Identifying necessary changes to other key finance outputs and related processes and systems, including budgeting, planning and forecasting and risk reporting
Assessing the impact on tax positions arising from the adoption of IFRS 10
  • Advise you in analysing changes to tax positions arising from the adoption of IFRS 10 and strategically managing the resulting impact
Planning for adoption of IFRS 10 and IFRS 12

Advise you on:

  • Designing the adoption timeline, based on the key finance output impact assessment described above
  • Identifying and agreeing specific changes to entity data collection and reporting processes with local and group management
  • Identifying and implementing changes to supporting IT systems
  • Revising financial statements and other impacted reports
Understanding the areas where management judgement needs to be applied
  • Advise management on those areas within IFRS 10 and IFRS 12 that require the careful use of judgement
  • Provide input into accounting manuals and policies selected by management
  • Provide you with coordinated support to EY subject-matter resources (Regulatory, Tax, Finance, Transformation, etc.) on a global basis
Improving your adoption readiness

Advise you on:

  • The effectiveness of your IFRS 10 and IFRS 12 adoption project and your overall state of readiness
  • Your data collection and reporting processes, governance and resulting reports, including areas needing improvement in advance of adoption on 1 January 2013
  • Your remediation plans for any areas identified requiring improvement
Stakeholder management
  • Advise on developing a communication plan for appropriate education and briefing of key internal stakeholders
  • Engage with your external reporting and investor relations teams regarding development of a communications plan

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