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This is the first in a series of posts focusing on themes and hot topics relevant to Internal Audit functions in organisations in the process of adopting IFRS 17 Insurance Contracts.
IFRS 17 is the most significant change in insurance accounting for a generation. For many insurers, particularly in the Life Insurance industry, understanding and delivering the necessary changes is complex and permeates the entire organisation. With this in mind, it is clear that an effective implementation plan that is well understood by its users is critical to an organisation’s IFRS 17 project running successfully.
Although there will have been iterations, most organisations’ implementation plans will now be close to their final form. A simple first step for Internal Audit is to understand management’s implementation plan in detail from methodology, Proof of Concept, build, dry runs right up to go-live including any regional rollouts and dependencies. Internal Audit should benchmark the status and costing of management’s IFRS 17 programme to similar organisations in the industry, and challenge the reasons for both positive and negative variances to peers.
Internal Audit can consider the above and management’s own risk assessment around project delivery when evaluating the implementation plan. Common areas of focus for auditors reviewing an IFRS 17 implementation plan include:
For individual organisations, there are likely to be a number of other risk factors that might impact delivery of IFRS 17, both internal (such as turnover of key project staff) and external (such as late clarification of requirements by the IASB) that can be layered into audit scopes.
An audit that considers an organisation’s implementation roadmap – whether on its own or as part of a broader scope – is a way to provide timely feedback and insight to the business on potential areas of delivery risk that management may not have identified. As insurers’ implementation plans crystallise, auditors should grasp the opportunity to provide confidence to management that plans are sufficiently accurate and granular to lay the foundations for successful project delivery.
Charlie has been a Senior Manager within Deloitte’s Insurance Audit group for the last 3 years. He is a qualified accountant with 9 years of experience providing audit and assurance services to general and life insurance clients. He focuses on the provision of internal audit and controls advisory services and manages a portfolio of internal audit engagements. Charlie began his career with Deloitte with a focus on SOX controls and spent two years seconded to Deloitte Canada leading the audit of a leading US listed life insurer. Since returning to the UK in 2017, Charlie has continued to manage the delivery of a portfolio of client internal audits as a key member of Deloitte’s Insurance Internal Audit team, working in the main with large global insurers. Charlie is the Insurance Audit group’s lead on IFRS 17 for Internal Audit, delivering training, advice and support to assurance teams on the subject. He specialises in audits in the areas of Finance and financial control. As well as delivering and managing internal audit programmes, he has also worked on IFRS 17 deliverables for London Market clients.