Re: Financial Accounting Ifrs Edition 2e Solution
Cherly Fleitas
This report addresses particular accounting issues the pharmaceuticals and life sciences sector faces when using the International Financial Reporting Standards (IFRS). The aim is to highlight the industry-specific factors which need to be considered, and to provide an opinion on the most pertinent accounting solutions for common commercial transactions under IFRS. Each solution is based on a specified set of circumstances. They cover general situations and provide a framework for determining the appropriate accounting answer but individual fact patterns may give rise to a different answer. Examples cover various practices in the following areas:
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These challenges greatly impact small and medium sized insurance companies that do not have the enough resources or money to achieve this significant finance and risk transformation. Siloed approaches, when hastily implemented, increase maintenance and slow down processes. Subledger solutions, however, allow companies to report using a single data set and deliver multiple accounting standard reports.
It is time to reduce the number of accounting steps and instead deliver practical solutions for IFRS 17 compliant reporting. Our REFRAMETM framework enables us to retain use cases with associated global best practice, delivered in a reliable and consistent manner, while safeguarding the option to leverage your implementation to extend your solution later on.
Because of its modular structure, our Packaged Solution for IFRS 17 Accounting can be extended to further simplify and enhance your accounting and closing process with optional services and solutions such as:
ImpairmentCalc is a robust and flexible solution for IFRS 9 that can accommodate the size and needs of most financial institutions. Users range from small firms with 20 names in their portfolios to large Tier 1 firms. Clients can transition from a more manual solution for small portfolios to an automated solution as their firm or portfolio grows, with information and tools for the transition provided as part of the customer service programme.
Moody's regulatory financial accounting solutions help insurance companies address global insurance regulations, financial standards, and accounting frameworks for the measurement and reporting of solvency, insurance contracts, and capital.
Our Reporting Studio integrates cloud technology, data management, business intelligence, and advanced reporting to address regulatory requirements, including EBA COREP, FINREP, and UK-specific reports (BoE, PRA, FCA). This holistic solution reduces the regulatory burden and compliance costs for financial institutions.
Fact: While a deadline extension does give a sense of relief, it is advisable to not let the momentum lag. IFRS17 solution is not just about putting a CSM engine in place. You need to have the right GL Chart of Accounts, the right ledger strategy, and a conducive ecosystem to bring your actuarial and accounting information together. This ensures consistency of data being reported across IFRS disclosures, management information packs, and regulatory submissions.
The experts at Rödl & Partner provide the required administrative infrastructure in the destination country for financial and payroll accounting with all the associated services. Our team has country specific expertise and extensive experience in dealing with cross-border issues and functions as your central contract. This reduces time-consuming and costly communication with the respective country locations so that you can comfortably manage and control your global participations from your headquarters.
We take a holistic and consistent approach to the organisation of your financial accounting processes. We observe the local legal requirements and also your internal compliance rules. Our experts are the interface for your central HR and controlling department and also for the area of group consolidation and internal audits. Under the all-embracing term of business process outsourcing we take on responsibility for your bookkeeping and financial accounting processes.
For our clients and prospects - some of whom have now come back to Aptitude after failed solution implementations - the use of an accounting hub and subledger to achieve IFRS 17 compliance has been the single most important differentiator for a successful IFRS 17 implementation.
An Accounting Hub can be made up of multiple components including standardized APIs, a financial data store, configurable posting engine, rich subledger and a reporting/extract layer. Together they provide a configurable, IP-rich solution.
The resulting end-to-end data lineage offers multiple benefits, such as a faster close process, a consolidated view of financial data and full control over all accounting calculations and reporting in one place.
IFRS 17 makes the sole use of a General Ledger for accounting virtually unsustainable. The standard requires a massive increase in data sets and calculations that cannot be managed by a general ledger at the level of detail required. Add in the audit scrutiny that insurers will undergo following the switch to IFRS 17 reporting and it's clear a General Ledger, with its aggregated balances and lack of source to post linkages, is not a long-term solution.
However, for many, the complexities in the accounting are only just being realized, resulting in some clear systems issues that are preventing them from delivering an operational solution. Here are seven common IFRS 17 solution issues that may arise during IFRS 17 projects.
Any comprehensive IFRS 17 solution will need to convert actuarial data and actual cash flow data into accounting transactions. The inbound insurance data should be processed by the accounting engine and posted to a granular subledger.
It is very easy for the number of accounting rules to explode as IFRS 17 requires the application of a significant change to the mechanism an insurance firm uses to create their books and records. When accounting rules are written on a contract-by contract basis, there is often a massive duplication of logic, leading to inconsistencies between developers as well as a maintenance nightmare once the solution goes live. An IFRS 17 solution needs to have built-in business logic and templates that are highly configurable and reusable rather than being a customized solution.
If these features are not included as part of the solution, the onus is on the General Ledger (GL) or custom processes to ensure the validity of the journals and complete the operational accounting process. Given the level of scrutiny expected on the part of auditors, shareholders and the ratings agencies, having a fully functional subledger with capabilities like zero balancing and automated reconciliations, operating at the journal level is essential. Auditors will check for quality of input data, calculations, accounting transactions and processes and thus the ability to drill down to a highly granular level is critical.
Finance teams are demanding an underlying data repository to plug the existing solution gaps that prevent them from accurately accounting, reconciling, and producing their disclosure reporting requirements. While some actuarial based solutions can undoubtedly calculate the expected CSM and RA numbers, it is the translation of these numbers into accounting inputs (debits/credits) and the associated postings that, when missing, pose a major challenge to insurers.
The solution can be owned by finance, reducing the dependence on IT and putting the control in the user's hands. It has significant built-in IP with templated rules for more than 160 insurance lifecycle business events which are used to generate IFRS 17 accounting transactions. These events are re-usable every time a new product is launched and hence help to manage the rules and ease the risk to the GL from storing an explosion of rules or data. A simple example is often shown during our POC playbacks, where the "ACID" business event (Assumption Change Increment Decrement) is re-used across policies and policy types whenever this type of data is discovered. The elegant 3-step accounting process used by Aptitude, ensures there is a minimal number of Business Events, Accounting Events and Posting Patterns to maintain, meaning a smaller, simpler and easier to audit set of accounting logic is in the hands of the Finance team.
SAP Fioneer builds on a heritage of outstanding technology and a deep understanding of corporate and consumer demands. At the heart of it all it is simple: We bring financial services to the next level with innovative software solutions and platforms.
We are helping companies in the financial services industry to achieve speed, scalability, and cost-efficiency through digital business innovation, cloud technology, and solutions that cover banking and insurance processes end-to-end.
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