By Patience Saghana
National Insurance Commission (NAICOM) may begin now to collaborate with the Nigerian Accounting Standard Board (NASB) on the modalities for insurance industry to meet the International financial reporting Standards (IFRS) deadline without breaching the laws of the local market.
Pushing for the collaboration between the two bodies are Nigerian insurance operators who attended the African Insurance OrganisationÂ (AIO) seminar in Cameroon . Insurance companies have often had problems with either NAICOM or NASB over accounting format that tend to differ which when breached either way, companies are slammed with penalties.
Some chieftains cited at the seminar are Mr Femi Okuniyi, Chief Executive of Goldlink Insurance Plc; Mr Emmanuel Jegede, CEO of NICON Insurance; Mr Yemi Soladaoye, Managing Director of RiskGuard Africa Nigeria Ltd; Mr Rotimi Fashola, Deputy Managing of IGI; Mrs Chioma Chukwuma, Chief Executive of Nigeria Reinsurance Plc; and Mr Tunde Hassan-Odukale of Leadway Assurance, among other top management of insurance companies including Mr Kola Adedeji of Niger Insurance and Mrs Funso Jolaiya of NICON Insurance
Mr Kola Adedeji, Executive Director (Finance & Admin) of Niger Insurance Plc in an interview suggested that insurance industry would need guidelines from NASB teaming up with NAICOM.
Adedeji said the standards are not really there for the Nigerian insurance industry to follow and it is high time for the industry to really adopt the IFRS. The partnership, he said would give rise to pressure for both convergence and divergence across insurance lines, thereby adding complexity and dynamism to the market structure of the industry.â€
â€œBy taking a proactive approach to understanding the impact of IFRS implementation on key business strategies, insurers can avoid the risk of being unprepared for the industry wide shift while seizing on emerging opportunities for differentiationâ€
IFRS, he maintained, is on the rise across the globe and the transition to new accounting policies under IFRS requires a change of mind-set, presenting companies with both challenges and opportunities.
Mr George Onekhena, Deputy Commissioner for Insurance (Finance & Admin) admitted that the Nigerian insurance industry has not keyed into the IFRS because the sector is waiting on the NASB.
Onekhena said, â€œWe understand that NASB has set a road map committee but we have not heard from the body since thenâ€
NAICOM, he noted, has its own financial reporting format, stating that the commission would not under any circumstances, approved any account that does not follow its format. The NASB is still debating on whether Nigeria would adopt the IFRS in whole or partly.
Mr Godson Nnadi, NASB Chief Executive said â€œThere were controversies regarding Nigeriaâ€™s readiness for the IFRS, with questions as to whether the Standards would be applicable to all corporate organisations in the country (financial and non financial institutions); when the convergence was to commence; weather Nigeria would adopt the IFRS in whole or in part.
Nnadi confirmed that the Federal Government inaugurated a roadmap committee recently, comprising experts from the World Bank and stakeholders in the Nigerian financial sector. The Committee is having meetings with the World Bank and other groups to further chart the timetable to guide the country with regard to the IFRSâ€.
The Committeeâ€™s terms of reference, he agreed, were to harmonise local standards set by the NASB and provisions of the IFRS and come out with a single document for the country. Nnadi said the Committeeâ€™s report will be submitted to the Governing Council of the NASB, which would issue a statement on it soon and thereafter pass the report to the government for the next line of action – detailing commencement date for the country.
The convergence, he said, would boost foreign direct investment inflow into the country, as the global business community will begin to have more confidence in Nigerian companies.
â€œThere is also the issue of promoting transparency but I must add that the document alone will not guarantee transparent as accurate financial reporting still depends on the human element,â€ he added.
He said Nigeria as a country will not be said to have converted to the IFRS until all companies are mandated to commence their financial reporting based on the expected Reporting format.
According to him convergence is a process of developing in the public interest a single set of high quality understandable and enforceable global standard to help those involved in the worldâ€™s capital markets and other users of financial information get accurate and reliable information that will enable them make informed investment decisions.
Nnadi said it was against this backdrop that the International Accounting Standard Board has in recent times been working toward convergence of accounting standard by bringing about the unification of national accounting standards with the aim of making IFRS the common accounting standard globally.