National Insurance Commission, NAICOM, has warned insurance companies to speedily adopt the International Financial Reporting Standard, IFRS, as the Commission will not tolerate companies’ financial statements that fail to meet the required standard going forward.
Deputy Commissioner Finance and Administration of NAICOM, Mr. George Onekhena, who disclosed this in Lagos, warned that weak insurance institutions must adopt a new approach and transform their operations if they are to remain afloat in the IFRS regime.
Onekhena urged the auditors of insurance institutions to be careful and vigilant in the auditing of financial statements of their clients, noting that the credibility of the auditing firms is at stake when they compromise. “If you sign and affix your stamp on any account, it is taken that such an account should be credible, but anything contrary to this will impact negatively on your credibility and could put you in trouble,” he said.
He noted that weak firms would find it difficult to survive the IFRS regime which entails total transparency, adding that NAICOM would not fail to sanction firms that are not ready to embrace change.
He urged auditors to be professional in their duties as clients look up to them for quality advice, stressing that auditors are required to always advise their clients on doing the right thing. He urged auditors to report any firm that wants to subvert the auditing process to NAICOM for disciplining.
Onekhena noted that auditors are required to play immense role in the industry’s transition and implementation of the IFRS, adding that insurance operators need to leverage on the professional competence of their external auditors.
Speaking on efforts by NAICOM to ensure the actualisation of the IFRS initiative, Commissioner for Insurance Fola Daniel, said the commission has been engaging operators, auditors, directors and management of companies on how to seamlessly migrate to the initiative.
He said two main outcomes have been reached by NAICOM and stakeholders on the initiative, adding that first, it was agreed that the 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, it was agreed that an accounting practices committee made up of the representative of NAICOM, insurers/reinsurers and external auditors should be set up. 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 board of directors of each company are responsible for the issuance of financial statements, and that consequently, both transition and sustenance of IFRS in accounting practices, should be a major item on directors’ agenda at this time.
Daniel noted that NAICOM’s decision to engage stakeholders was informed by the need not only to create awareness of the implication of IFRS for 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 that at the end of our engagements, the stakeholders will have sufficient level of understanding as to know what critical questions to ask and what steps to take in the bid to ensure that their companies successfully transit to and embed IFRS in their accounting practices within the timelines specified in the Nigerian Roadmap.
While saying this, it is important to note that we are committed to supporting the stakeholders 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.