The areas of greatest subjectivity and interest within the IFRS financial statements of large european insurance groups
For the fifth consecutive year, Mazars has carried out a detailed analysis of the largest insurance groups’ financial information. The accounts of insurance entities for the year ended 31 December 2012 were prepared against an ongoing background of economic crisis, characterised by: continuing weak growth in the major world economies; low interest rates; and persistently volatile markets.
The areas of greatest subjectivity and interest within the IFRS financial statements of insurance groups as at 31 December 2011
IFRS 10, which was published in May 2011, introduces a single definition of control and replaces the portion of IAS 27 which related to consolidated financial statements, as well as the SIC 12 interpretation on special purpose entities.
According to the IASB’s schedule, the new standard is effective from 2013 for entities with a reporting date at the end of the calendar year.
On 12 May 2011, the IASB published IFRS 11, Joint Arrangements, which cancels and replaces IAS 31, Interests in Joint Ventures. Nearly four years had therefore passed between the publication of the exposure draft ED 9 in September 2007 and the publication of the final standard. Four years during which the stakeholders tried and failed to have their voice heard by the IASB.
Since 2008 and the financial crisis, both analysts and investors have faced increased difficulty in assessing insurance groups’ performance. We have performed an analysis of the financial statement disclosures based on the 2010 year-end IFRS financial statements of several of the largest insurance and reinsurance groups looking at issues:
Mazars Insight IFRS 3 & IAS 27 - 2008/2009
Mazars published a technical brochure addressing the changes to IFRS 3 and IAS 27.
Under investors’ pressure, the FASB (i.e. the American accounting standard setter) and IASB initiated a few years ago a roadmap to the convergence of US GAAP and IFRS.
Mazars Insight: IAS 36 - 2009
The financial crisis and the fall of stock market prices are indications of potential impairment of long-term non-financial assets (intangibles, goodwill, tangibles, etc.).
Against this background, many companies have experienced the difficulties of applying the impairment tests set out in IAS 36, Impairment of assets.
These difficulties are increased by the lack of visibility on business plans in a very uncertain economic and financial environment.
Mazars Insight IFRS 5 - 2009
Practical guide to application and expected changes
IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, was published to achieve convergence with US GAAP and represented a significant change for many companies.
This recent standard - effective from 1 January 2005 - has raised a lot of practical questions as to its implementation, particularly given the non-recurrent nature of operations falling within its scope.