Securities and Exchange Commission of Pakistan (SECP) has notified draft of accounting rules and regulations for the Life and non-Life Insurance companies.
The drafted revised Accounting Formats and regulations for published financial statements and regulatory returns by insurance entities have been notified in the official gazette of Pakistan to elicit public and stakeholders comments.
By issuing these accounting formats and regulations, the SECP, as the apex regulator, aimed to protect the interests of policyholders and promote the sound development of the insurance industry.
The existing SEC [Insurance] Rules 2002, annexed with it were the Accounting Regulations & its Formats were introduced by the SECP in 2002. Since the issuance of these rules, almost a decade ago, there have been remarkable developments and changes in the International Reporting Standards (IFRSs) by International Accounting Standards Board.
Accordingly, at the behest of the SECP, the Institute of Chartered Accountants of Pakistan (ICAP) reconstituted the Insurance Sub-Committee. The Committee comprised of industry experts, senior partners of chartered accountant firms, and representatives from the Insurance Division of the SECP and technical experts from the ICAP. The mandate given by the Commission was to review the current accounting regulations and formats in respect of conventional Life and Non-life Insurers by taking into consideration the International Standards.
The Committee was also to address the concerns of the industry in relation to IFRS 4. The underlying objective of IFRS 4 was to achieve global harmonization of the diverse accounting disclosures and practices in the insurance industry. After in-depth deliberations, the SECP notified the draft rules and regulation format for public consultation. Only those comments and suggestions shall be considered and incorporated which are found viable and in the spirit of law thereafter the final rules and regulations shall be announced.
It is envisaged that the revised set of accounting rules and regulations shall bring in more transparency, establish enhanced disclosures requirements that would be useful in decision-making by present and potential policyholders, investors, lenders, etc.
