What is the difference between IFRS 4 and IFRS 17?

The key difference between IFRS 17 and IFRS 4 is the consistency of application of accounting treatments to areas such as revenue recognition and liability valuation. Profit recognition at the start of the contract. Revenue includes premium and may include an investment component.

What is the purpose of IFRS 17?

The aim of IFRS 17 is to standardise insurance accounting globally to improve comparability and increase transparency, and to provide users of accounts with the information they need to meaningfully understand the insurer’s financial position, performance and risk exposure.

What does IFRS stand for?

International Financial Reporting Standards
International Financial Reporting Standards (IFRS) are a set of accounting standards that govern how particular types of transactions and events should be reported in financial statements. They were developed and are maintained by the International Accounting Standards Board (IASB).

Is IFRS 4 still applicable?

IFRS 4 was issued in March 2004 and applies to annual periods beginning on or after 1 January 2005. IFRS 4 will be replaced by IFRS 17 as of 1 January 2023.

Why did IFRS 4 replace IFRS 17?

IFRS 4 explains how to disclose insurance contracts, but to put it simple, there are too many issues with IFRS 4 to make a good comparisement among insurance companies and to compare an insurance company to a non-insurance company, therefore IFRS 17 is needed.

What is the difference between IFRS 9 and IFRS 17?

IFRS 17 requires companies to present one restated comparative period. IFRS 9 permits but does not require restatement of comparative periods, and prohibits companies from applying IFRS 9 to financial assets derecognised in the comparative period.

Does IFRS 17 replace IFRS 4?

IFRS 17 replaces IFRS 4 Insurance Contracts. When introduced in 2004, IFRS 4—an interim Standard—was meant to limit changes to existing insurance accounting practices. Hence, IFRS 4 has allowed insurers to use different accounting policies to measure similar insurance contracts they write in different countries.

What does IFRS 4 say?

IFRS 4 defines an insurance contract as a “contract under which one party (the insurer) accepts significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder.” The standard provides …

What does IFRS 9 mean for insurance companies?

IFRS 9 sets out the requirements for recognising and measuring financial assets and financial liabilities. It replaces IAS 39 Financial Instruments: Recognition and Measurement and has an effective date of 1 January 2018.

Is IFRS applicable on insurance companies?

IFRS 17 is the first comprehensive international accounting standard for insurance contracts issued by a company, including the reinsurance contracts. The existing IFRS 4 does not prescribe any accounting for measurement of insurance contracts.

What is the objective of IFRS 4?

The objective of IFRS 4 is to specify the financial reporting for insurance contracts by any entity that issues such contracts (described in IFRS 4 as an insurer).