Speakers at a conference said Financial Reporting in Insurance Sector of Bangladesh is facing setback due to some grey areas between the International Financial Reporting Standard (IFRS) and existing local rules and regulations.
They also identified the differences between IFRS and Local Laws and Regulations in regards to components of financial statements and presentations, revenue recognition, financial instruments, estimated insurance liabilities, etc.
The observations came from a virtual members’ conference on ‘Financial Reporting in Insurance Sector of Bangladesh’ organised by the Institute of Chartered Accountants of Bangladesh (ICAB).
Referring to the absence of Takaful Guidelines for Reporting, Chairman of Insurance Development and Regulatory Authority Dr M Mosharraf Hossain said they have to maintain three specific funds under the Takaful business – Operator fund, Participants’ Investment Fund, and Participants’ Risk fund.
“We need clear direction from regulators while IFRS guidelines on Takaful insurance reporting,” he added.
On the classification of owner-occupied property, he also said said IFRS requires owner-occupied property to be reported under the property, plant and equipment heading of the balance sheet. However, local regulatory framework mandates all real-estate properties to be reflected within the Investments heading of the balance sheet.
Senior Deputy Director of ICAB SM Abu Nayem Ahmed said Global standards IFRS and Local Regulations should be aligned for proper Financial Reporting in Insurance Sector of Bangladesh.
In general practice, in case of conflict, general understanding is that the local laws and guidance from primary regulators would prevail. As a result, a number of deviations are seen from IFRS in the financial reporting of insurance companies, he observed.
For implementing full IFRS reporting framework there is an urgent need to align the Insurance Regulator and other authorities like ICAB, and FRC, he suggested saying that ICAB together with FRC and IDRA would develop a road map to align accounting practice in Bangladesh with IFRS.
Mahmudul Hasan Khusru FCA, President, ICAB delivered address of welcome while Ala Uddin FCA, Chief Financial Officer, American Life Insurance Company (MetLife) presented keynote papers in the conference.
Bangladesh Insurance Sector is currently governed by the regulatory frameworks; The Insurance Act, 1938 and the corresponding Insurance Rules, 1958; The Insurance Act, 2010 (however, no corresponding Insurance Rules or Regulations for all areas); The Financial Reporting Act, 2015; The Companies Act, 1994; The Securities and Exchange Rules, 1987 and IFRS (International Financial Reporting Standards).