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By NBF News
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The National Insurance Commission (NAICOM) is set to issue new guidelines and modalities for the insurance sector on the International Financial Reporting Standard (IFRS).

NAICOM said that the guideline will ensure that there is uniformity in the financial statements of insurance companies when they eventually transit to IFRS.

Mr. Nicholas Opara, Acting Director of Supervision of NAICOM who disclosed this at training on IFRS for insurance correspondents in Ijebu-Ode, Ogun State organised by NAICOM said that the IFRS is principle based and not rule based which means that management of companies are free to make diverse and varied choices but such choices must be explained.

In order to prevent a situation whereby every operator will have a unique financial result based on the freedom which IFRS affords, Opara said that issuing a guideline to check excesses has become imperative in the insurance sector.

According to Opara, once the guideline is out, insurance companies are expected to open their balance which will read from January 2011.

Meanwhile NAICOM has also charged management teams of insurance companies to take concrete steps to educate themselves on the new IFRS reporting format because most management teams of companies see IFRS as mere accountants' affair and are depending on consultants to do the entire transition on their behalf which is not in the interest of such companies.

Mr. George Onekhena, Deputy Commissioner Finance & Accounts of the National Insurance Commission (NAICOM) who made this assertion stressed that accountants or management teams of companies waiting for consultants to handle in entirety their IFRS transition lack direction.

In his words, 'Any accountant or management team waiting for a consultant to do their IFRS job for them has already failed because you need to understand it first as an operator.'

Onekhena regretted that a lot of leadership of insurance companies are not taking IFRS seriously, stating 'Many leadership are not taking the IFRS seriously rather they are taking it as an accountant stuff. When they will be hit, they will then take it seriously.'

On what insurance companies stand to gain in the adoption of IFRS, Onekhena said that IFRS enables insurers to report in a way that reflects reality and substance rather than the shadow.

According to him, with the IFRS there is going to be lots and lots of disclosures from the insurance companies and it is going to revolutionise the insurance industry.

With the dissolution of Nigeria Accounting Standards Board and the creation of the Financial Reporting Council, (FRC) Onekhena posited that the FRC is going to rope auditors into line and they will not have the kind of powers they initially have.

He therefore charged insurance companies to embrace IFRS because foreign investors will be looking at the country with suspicion if they continue to dilly dally, adding that such attitude is doing damage to the country.

He explained that the IFRS is divided into two phases and the first phase which is the transitory and permissive stage will end in 2012 while the second phase which is the convergence stage is in 2015.

He advised insurers to take up the challenge because with IFRS technologies will change and presently, Nigerian insurers don't have the adequate software. According to him, they should not wait till the last minute, but should begin in their own individual capacities.