Duration of Course: Three-day Programme
A three-day practical training course addressing the proposed new treatment of insurance contracts under IFRS 4
Case Studies: Accounting for Life Assurance Contracts
The Importance of Insurance Accounting
Weaknesses in various accounting standards have forced accounting standard setters to review current approaches to insurance accounting. New regulatory moves, particularly IFRS 4 now make it very important for accountants within the insurance industry not only to up-date themselves on proposed new accounting standards but also to ensure that they represent the risks and performance accurately on the financial statements. Revolutionary changes are expected to take place over the next two years, creating a demand for people with knowledge and expertise in 'fair value' accounting, hedging and risk management.
The New IFRS 4 Insurance Contracts standard require certain insurance contracts to be valued using fair value accounting. For entities within the European Union this will have a huge impact on the way that accounts are prepared. The European Union is pressing for conversion to the IASB standards by 2005 as part of its commitment to a common market. Phase 2 is expected to be complete by 2007.
The IASB insurance proposals are revolutionary and will have major implications for companies that have no previous experience with the new valuation models. Insurance companies and their auditors can therefore expect a considerable workload in the next few years.
Most analysts and accountants readily admit that the former insurance accounting standards were not only inconsistent but incapable of dealing with the complexities of various insurance entities. The possibility of creative accounting scandals or litigation against accountants, their advisors and auditors will increase unless accountants not only understand the revolution in insurance accounting, but also understand the unique risk profile that insurance entities face and the difficulties of applying fair value accounting to complex products.
To restore business and public confidence, accountants must come to grips with the complex nature of insurance accounting and devise strategies for addressing their weaknesses. This course is designed to identify the current accounting treatments proposed for insurance companies. It will enable delegates to see how, even with complying with the accounting standards, figures can become distorted and misleading. Using live case studies, delegates will develop skills to determine where published accounts do not reveal the true nature and risk of the underlying entity. All sets of accounts present warning signals. Delegates will learn how to identify such signals and recalculate where necessary, earnings per share.
Cormac Butler is currently an active equity and options trader and a former consultant with Lombard Risk Systems London and has also worked with Peat Marwick and Coopers & Lybrand. He has considerable international experience as a training consultant in Derivative Accounting, Corporate Finance and Derivative Mathematics, working with major banks including Salomon Brothers, Robert Fleming and Banque Paribas. He has recently conducted in-house courses for Salomons, Morgan Stanley Dean Whitter (London), PriceWaterhouseCoopers (Holland), Investec (South Africa) and ABB Switzerland. In addition, he has worked for IIR and Euromoney in Singapore, Hong Kong, Thailand, America and Saudi Arabia. Cormac graduated from the University of Limerick, Ireland with a degree in Finance He has recently published Mastering Value at Risk (Financial Times Pitman) which is currently on the best sellers list (for Risk Management books) with Amazon.com, Gloriamundi.org and Financial World Bookshop (London).
Introduction to IFRS 4
Phase Two
Life Assurance
Liability Adequacy Testing
Participation Features
Examples of Current Insurance Accounting Practices
IFRS 4 V IAS 39 P&L Volatility Issues
Changes in Accounting Policies
Disclosures
Application of IAS 39
Principal v Form of Insurance Contracts
Evaluating Difference between Insurance & Financial Risk
Accounting Treatments
Treatment of Investment Linked Contracts
Accounting Systems
Comparison of Accounting Treatments
Financial Instruments