The global International Financial Reporting Standard (IFRS) and local regulations should be aligned for proper financial reporting in the insurance sector of Bangladesh, speakers said at a conference on "Financial Reporting in the Insurance Sector of Bangladesh" on Monday.
Speakers at the conference said financial reporting in the insurance sector of Bangladesh is facing setbacks due to some grey areas between the IFRS and existing local rules and regulations.
They also identified the differences between IFRS and local laws and regulations in regards to: components of financial statements and presentations, revenue recognition, financial instruments, estimated insurance liabilities, etc.
The above observations emanated from the virtual members' conference organised by the Institute of Chartered Accountants of Bangladesh (Icab).
Bangladesh's insurance sector is currently governed by the following regulatory frameworks: The Insurance Act 1938 and corresponding Insurance Rules 1958, The Insurance Act 2010; The Financial Reporting Act 2015, The Companies Act 1994, The Securities and Exchange Rules 1987, and IFRS.
Referring to the absence of Takaful Guidelines for Reporting, the speakers said, "We have to maintain three specific funds under the Takaful business – an operator fund, a participants' investment fund and a participants' risk fund. Hence, we need clear direction from regulators while IFRS guidelines on Takaful insurance reporting needs further alignment with the local rules and regulations."
On the classification of owner-occupied property, they said IFRS requires owner-occupied property to be reported under the property, plant and equipment heading of the balance sheet.
However, the local regulatory framework mandates all real estate properties be reflected under the investments heading of the balance sheet.
In general practice, in case of conflict, the understanding is that the local laws or guidance from primary regulators prevail. As a result, a number of deviations are seen from IFRS in the financial reporting of insurance companies, they observed.
To fully implement the IFRS reporting framework, there is an urgent need to align the insurance regulator and other authorities like Icab and the Financial Reporting Council (FRC). They suggested that Icab, together with FRC and the Insurance Development and Regulatory Authority (Idra), develop a road map to align accounting practice in Bangladesh with IFRS.
Dr M Mosharraf Hossain FCA, chairman of Idra, attended the conference as the chief guest.
Mahmudul Hasan Khusru FCA, president of Icab, delivered the welcome address. Muhammad Farooq FCA, member council and former president of Icab, introduced the keynote speaker and chaired the session.
Sk Md Tarikul Islam FCA, partner, Hoda Vasi Chowdhury and Co; Chartered Accountants and Ala Uddin FCA, chief financial officer of American Life Insurance Company (MetLife) presented keynote papers at the conference.
Icab Chief Executive Officer (CEO) Shubhashish Bose delivered the introductory speech at the event.
M Ala Uddin Ahmad FCA, GM of MetLife Bangladesh; Mohammad Mohiuddin Ahmed FCA, executive director of the Financial Report Monitoring Division, Financial Reporting Council Bangladesh; Md Alamgir Hossain, member (income tax policy) of National Board of Revenue; and Nurun Nahar, executive director of Deposit Insurance Department, Bangladesh Bank; were present as special guests.
Abdul Kader Joaddar FCA, vice president of Icab delivered the closing remarks of the conference.