Insurance-Nigeria - National Insurance Commission (NAICOM) has advised insurance institutions in the country to take advantage of the information in the proforma complete financial statement document which was recently released by the commission in order to improve on both their account presentation and disclosure of their audited financial statements. Commissioner for insurance Mr Fola Daniel who gave the advice at the international finance reporting standards awareness seminars for chairmen of audit committees and non-executive directors of (re) insurance companies held in Lagos said the key change the new document seeks to introduce is improved financial reporting from a disclosure perspective. "We want to encourage companies to take advantage of the information in this document to improve both the presentation and disclosure of their audited financial statements.

Perhaps it is important to say that companies that do not significantly improve their reporting along the lines prescribed stand the risk of being disadvantaged when their financials are compared with their competitors', the commissioner stated.

He spoke on the industry's financial reporting practices last year saying "we succeeded in significantly improving the level of compliance with the Nigerian GAAP by getting some companies to amend their financial statements to reflect a standard we believe all operators should comply with, if their financials will be relevant and useful to both domestic and international users.

According to the insurance commissioner, the feedback received by the commission from many informed users was encouraging.

He said the price for this change for some companies was significant, adding that not only did insurance firms in the country have to make major provisions that significantly impacted their shareholders fund, it took them quite some time to deal with queries by NAICOM. A situation which he said resulted in delays in the submission of the financials to the Nigerian Stock Exchange.

Speaking on the 2010 accounts Daniel said,"With regard to the financials for the year 2010, I want to appeal to you to ensure that lessons learnt from the processes in 2009 are reflected in 2010, including action on matters which were deferred with our agreement to 2010. Our doors are open for any area of uncertainty so that they will be cleared and agreed upon before you submit your accounts, but you must ensure you come with your Auditors," he stated.

The insurance commissioner informed that there is now a closer coordination amongst regulators adding that NAICOM will give Securities and Exchange Commission and Nigerian Stock Exchange reports on accounts it approved.

According to him, the seminar was organized to familiarize chairmen of audit committee and representatives of non-executive directors with the features of International Financial Reporting Standards (IFRS) and their impact on insurance/reinsurance companies.

According to him, the seminar is part of the commission's plan to facilitate a seamless and cost effective transition to IFRS in the Nigerian Insurance Industry.He also said It was a follow-up to the meeting held with chief executive officers and chief finance officer early January 2011 to discuss the issues in IFRS conversion and agree on how a cost effective transition can be achieved.

He recalled that there were two main outcomes from that meeting. First, according to the commissioner was agreement that the insurance market should adopt common approach to IFRS provided that such option will not place any individual company or the market at a competitive disadvantage domestically and internationally.

Secondly, He said the second agreement was that an Accounting Practices Committee made up of the representative of National Insurance commission, Nigerian Insurers/Reinsurers and External Auditors should be set up.According to the commissioner, the function of the committee is to address all accounting issues of concern to the industry including those emerging from IFRS standard setting process.

He said henceforth, board of directors of each company will be responsible for the financial statements issued by the company adding that both the transition to and sustained application of IFRS in their accounting practices should be a major item on their agenda at this time.

According to Daniel,the decision to invite participants to the seminar is informed by the need not only to create awareness of the implication of IFRs for their financial reporting responsibilities but also to acquaint them with the scale of change and the sense of urgency in the attention it deserves.

"Our expectation is therefore that at the end of this meeting you will have sufficient level of understanding as to know what critical questions to ask and what steps to take in the bid to ensure your companies successfully transit to and embed IFRS in your accounting practices within the timelines specified in the Nigerian Roadmap.

While saying this, it is important to note that we are committed to supporting you in the process. For this purpose, we have set up an IFRS help desk in the Commission to address issues that companies may have in the process of transiting to IFRS," the commissioner stated.

Daily Champion/22/03/2011