CIA (e)Bulletin/(e)Bulletin de l'ICA
Past Issues |  
March 2015

Many Are Awaiting Developments on IFRS 4

Print Print this Article | Send to Colleague

By Bruce Langstroth, FCIA

Insurance practitioners, and those of them active in valuation and financial reporting in particular, are probably well aware of the ongoing work of the International Accounting Standards Board (IASB) to update International Financial Reporting Standard 4 – Insurance Contracts (IFRS 4).

Many of you, however, may be less aware of how actuarial standards and guidance material supporting IFRS 4 will emerge. What is the role of Canada’s Actuarial Standards Board (ASB) and the CIA Practice Council (and supporting practice committees)? The purpose of this article is to provide a bit of illumination around those questions.

The first step in establishing Canadian actuarial practice will be the publishing of an International Standard of Actuarial Practice (ISAP) by the International Actuarial Association (IAA). This naturally follows on from the international application of IFRS 4 and the desire to support the IASB’s goal of promoting consistency of accounting on a global basis—an international accounting standard should be supported by an international actuarial standard. The IAA has already articulated a statement of intent in relation to the ISAP and work in earnest will begin as soon as the final IFRS 4 is available.

The ASB has generally taken the position that it will adopt ISAPs with such modifications as may be required to adapt them for the Canadian environment, and one can expect that it will take the same general approach to the IFRS 4 ISAP. The ASB has established a designated group for the development of standards related to IFRS 4 in anticipation of the final IFRS 4 standard and the work that the IAA will be pursuing in relation to the IFRS 4 ISAP.

As with "made-in-Canada" standards, the Practice Council will provide guidance in relation to the application of actuarial standards relating to IFRS 4. While the Committee on Life Insurance Financial Reporting and the Committee on Property & Casualty Financial Reporting are well aware of the coming change in standards, the final IFRS 4 standard and sufficient progress on the IFRS 4 ISAP will provide a line of sight on the standards for which guidance will be required.

The CIA’s International Relations Council (IRC) has a mandate to "oversee relations with actuarial organizations outside Canada", "be familiar with and make recommendations to the Board about specific projects which involve, or could involve the CIA", and "respond to requests for comments on international actuarial topics and make submissions as appropriate". While the IRC does not have a direct role in the development of actuarial standards and guidance in relation to IFRS 4, it has a broad oversight role that is intended to ensure that the CIA is aware of and is prepared to take appropriate actions in relation to non-Canadian activity.

Finally, the CIA has established the Task Force on International Financial Reporting Standards (IFRS) readiness with a mandate "to coordinate efforts among the Practice Council, the Actuarial Standards Board, and the Committee on International Relations [now the International Relations Council]". The task force has explicitly been tasked to ensure that Canadian stakeholders are appropriately informed and engaged as IFRS 4 work progresses.

In conclusion, the process of ultimately seeing IFRS 4-related standards and guidance will be a complicated and time-consuming process and many groups and volunteers are eagerly waiting the final IFRS 4 standard.

Bruce Langstroth, FCIA, is Chair of the Practice Council.



Back to CIA (e)Bulletin/(e)Bulletin de l'ICA

Share Share on Facebook Share on Twitter Share on LinkedIn