There's a general sense of dread and gloom concerning IFRS 17 because of cost worries and a perceived

lack of benefits among some insurers. But, rather than dealing a fatal blow to the insurance industry's
balance sheet, I believe it will bring the following benefits: liabilities valued at market value, truer
reflection of profits, near-global consistency Collaboration between actuaries and accountants, better
governance of actuarial systems, greater protection for policyholders, and investor confidence. 

Critique:
IFRS 17 aims at targeting all insurance contracts as the norm actually mentions a definition of insurance
contracts (International Accounting Standards Board [IASB], 2017, p. 7).

International Accounting Standards Board (2017). The forthcoming IFRS insurance contracts Standard:
Why change insurance contracts accounting?

It was slightly different for IFRS 4 that focused its application more on the insurance companies. It can
therefore be concluded that IFRS 17 is willing to be more global, not excluding any segment. As
portrayed in the previous section, IFRS 4 was incomplete and the new norm’s objective is to complete it
with many different changes in the way companies deal with their insurance contracts. The focus here
lies on five particular elements which have been discussed with companies’ representatives. This will be
helpful later for a better understanding of the answers that have been received through questioning the
representatives

A study on the expected impact of IFRS 17 on the transparency of financial statements of insurance
companies Auteur : Mignolet, Félix Promoteur(s) : Schumesch, Patrice Faculté : HEC-Ecole de gestion de
l'ULg Diplôme : Master en sciences de gestion, à finalité spécialisée en Financial Analysis and Audit
Année académique : 2016-2017 URI/URL : http://hdl.handle.net/2268.2/2782

The quantitative and qualitative disclosure requirements in IFRS 17 are more extensive than the current
reporting frameworks in many jurisdictions under IFRS 4, Insurance Contracts (IFRS 4), an interim
standard effective prior to the adoption of IFRS 17.
IFRS 17 includes specific disclosure requirements for groups of insurance contracts in force on transition,
where simplifications on transition affect the measurements in the financial statements. The effect on
insurance revenue and the contractual service margin (CSM) and judgements applied in determining the
transition amounts should be separately disclosed and explained in the subsequent periods, until the
insurance contracts written before the transition date are derecognised. Such recurring disclosures
illustrated are also indicative of the type of information that would be required in the year of adoption,
among other transition disclosures.
Insurers will need to closely monitor the developments and take account of their individual
circumstances in determining the manner of providing material information required by IFRS 17 in the
way that most faithfully represents their insurance contracts and transactions. The approaches
illustrated in this publication are one possible way the requirements of IFRS 17, IFRS 9 and IFRS 7 may be
met but are not intended to provide any view on the type of approach that should be applied.
IFRS 17, Insurance Contracts: An illustration Financial statements presentation and disclosures
Sandra Thompson
Gail Tucker
Anthony Coughlan
Lars Jorgensen
2019 PricewaterhouseCoopers.
https://www.pwc.com/gx/en/audit-services/ifrs/publications/ifrs-17/ifrs-17-illustration-feb-26.pdf

Because of the many requirements imposed by the IASB, it has been suggested that disclosure under
IFRS 17 will promote transparency. However, it is possible that the new standard will not be as
transparent as what corporations are presently doing under specific local GAAP, where transparency is
already quite essential; this is dependent on country legislation. Even if, in general, the need that firms
publish their valuation processes, for example, is a step toward full transparency for financial statement
readers.
Some CFOs are also not convinced that the upcoming standard will deliver enough transparency, or at
least not as much as they expect, partially because they claim that more information does not equal
better quality information. However, contrary to popular belief, some performers believe that the more
information displayed, the better. It is then up to the readers to figure out what information is most
important to them.
Estomba, J., Heeralall, S., & Andries, D. (2017). IFRS 17 Insurance Contracts: Illustrative example of the
Variable Fee Approach (EFRAG TEG meeting, Paper 02-02).

The new standard IFRS 17 published in May 2017 has fulfilled the goal of the IASB. The goal is to provide
more transparent information about the effect and revenue of insurance contracts on financial
statements and to standardize the accounting methods in order to improve the comparisons between
products, companies and across jurisdictions, as stated in one of its presentation (Scott, n.d.).
Scott, D. (n.d.). New IFRS: Insurance Contracts Project

There are significant opportunities to use IFRS 17 as a catalyst for further changes needed in supporting
functions such as Finance and Actuarial. It is clear that no single approach works for the entire industry.
Whatever the approach, we believe that only with a truly integrated solution that closely connects the
data, systems and process environment between Finance and Actuarial will insurers be able to meet the
challenges of the future.
Estomba, J., Heeralall, S., & Andries, D. (2017). IFRS 17 Insurance Contracts: Illustrative example of the
Variable Fee Approach (EFRAG TEG meeting, Paper 02-02).

International Accounting Standards Board (2017). The forthcoming IFRS insurance contracts Standard:
change in insurance contracts accounting.

Lina Palmborg Mathias Lindholm Filip Lindskog Financial position and performance
in IFRS 17 .Pages 171-197 | Received 11 May 2020, Accepted 10 Sep 2020,
Published online: 25 Sep 2020

Mignolet, Félix 2016-2017, A study on the expected impact of IFRS 17 on the transparency of financial
statements of insurance companies . global-dsp-considerations

Millan

Sandra Thompson, Gail Tucker, Anthony Coughlan , Lars Jorgensen 2019. IFRS 17, Insurance Contracts:
An illustration Financial statements presentation and disclosures. PricewaterhouseCoopers.

Scott, D (2019). New IFRS: Insurance Contracts Project. Financial Reporting Journal, 69 (8): 359-430.
PSA 501:
This Philippine Standard on Auditing (PSA) deals with specific considerations by the auditor in obtaining
sufficient appropriate audit evidence in accordance with PSA 330 (Redrafted),1 PSA 500 (Redrafted)2
and other relevant PSAs, with respect to certain aspects of inventory, litigation and claims involving the
entity, and segment information in an audit of financial statements (Auditing and Assurance Standards
Council, 2009)

“Audit evidence” is all the information used by the auditor in arriving at the conclusions on which the
audit opinion is based, and includes the information contained in the accounting records underlying the
financial statements and other information. Auditors are not expected to address all information that
may exist. Audit evidence, which is cumulative in nature, includes audit evidence obtained from audit
procedures performed during the course of the audit and may include audit evidence obtained from
other sources such as previous audits and a firm’s quality control procedures for client acceptance and
continuance (Chege, 2009)

The objective of the auditor is to obtain sufficient appropriate audit evidence regarding the: (a)
Existence and condition of inventory; (b) Completeness of litigation and claims involving the entity;
and (c) Presentation and disclosure of segment information in accordance with the applicable
financial reporting framework (Smith et al., 2014)

ISA 501 deals with three specific items that may be contained within a set of general
purpose financial statements and for which the auditor may need to obtain sufficient
appropriate audit evidence. It deals with specific considerations for:

 inventory;
 litigation and claims; and
  segment information.

In terms of financial statement assertions, ISA 501 looks to address whether, at the
reporting date, inventory actually exists and whether the values placed on the inventory
are appropriate with regard to the condition of the inventory. Litigation and claims
pertaining to the entity need to be complete and segment information needs to be
correctly presented and disclosed within the financial statements.

(Practer, 2018 ).

Application and Other Explanatory Material

Management ordinarily establishes procedures under which inventory is physically counted at least once
a year to serve as a basis for the preparation of the financial statements and, if applicable, to ascertain
the reliability of the entity’s perpetual inventory system

Depending on the applicable financial reporting framework, the entity may be required or permitted to
disclose segment information in the financial statements. The auditor’s responsibility regarding the
presentation and disclosure of segment information is in relation to the financial statements taken as a
whole. Accordingly, the auditor is not required to perform audit procedures that would be necessary to
express an opinion on the segment information presented on a stand alone basis
(IAASB, 2008).

References
(Auditing and Assurance Standards Council, 2009) Philippine Standard on Auditing 501 (Redrafted)
AUDIT EVIDENCE – SPECIFIC CONSIDERATIONS FOR SELECTED ITEMS

Chege, 2009

International Auditing and Assurance Standards Board (2008) Basis for Conclusions: ISA 510 (Redrafted),
Initial Audit Engagements— Opening Balances

Practer, Paul. 2003. International Financial Reporting: Ideas for Research and Teaching. Accounting
Faculty Workshop, Texas A&M University.
Smith, M., Sagafi-Nejad, T. & Wang, K. (2014) Going International: Accounting and Auditing Standards.
Internal Auditing, Vol. 23, No. 4, pp. 3-12, July 2008
 ISA 520 definitions
Analytical procedures – definition
Means evaluations of financial information through analysis of plausible relationships among both
financial and non-financial data. Analytical procedures also encompass such investigation as is necessary
of identified fluctuations or relationships that are inconsistent with other relevant information or  that
differ from expected  values by a significant amount (Ullah, 2015).

ISA 520 Scope

The auditor's use of analytical processes as substantive procedures is addressed in ISA 520  at the
completion of the audit, to assist the auditor in reaching a general conclusion about the financial
statements; the use of analytical processes to risk assessment; and During the audit, usage of
substantive analytical processes ( Arens et al., 2014).

ISA 520 Effective date 15 December 2009

ISA 520 Objective

 The auditor's objectives are as follows:

 To obtain relevant and reliable audit evidence when using substantive analytical procedures;
and
 To design and perform analytical procedures near the end of the audit that assist the auditor
when forming an overall conclusion as to whether the financial statements are consistent with the
auditor’s understanding of the entity (IAASB, 2018).

ISA 520 Requirements

 ISA 520   require auditor  in respect of designing and performing analytical procedures  to (Kais, 2017);

 Determine the suitability of particular  substantive analytical procedures for given assertions,
taking account of the assessed risks of material misstatement and tests of details, if any, for these
assertions;
 Evaluate the reliability of data from which the auditor’s expectation of recorded amounts or
ratios is developed, taking account of source, comparability, and nature and relevance of information
available, and controls over preparation;
 Develop an expectation of recorded amounts or ratios and evaluate whether the expectation is
sufficiently precise to identify a misstatement that, individually or when aggregated with other
misstatements, may cause the financial statements to be materially misstated; and
 Determine the amount of any difference of recorded amounts from expected values that is
acceptable without further investigation.
ISA 520 require auditor to perform analytical procedure near the end of the audit that assist the auditor
when forming an overall conclusion as to whether the financial statements are consistent with the
auditor’s understanding of the entity.
Investigating Results of Analytical Procedures
ISA 520 require auditors to identify fluctuations or relationships that are inconsistent with other relevant
information or that differ from expected values by a significant amount, the auditor shall investigate
such differences by (TAMAR, 2017):

 Inquiring of management and obtaining appropriate audit evidence relevant to management’s

responses; and
 Performing other audit procedures as necessary in the circumstances.

References:

A.Arens, A., J. Elder, R., & S. Beasley, M. (2014). Auditing and Assurance services- An Integrated
Approach. United States of America: Pearson Education.

International Auditing and Assurance Standards Board (IAASB). (2018). Handbook of International
Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements (Vol. 1). 529
Fifth Avenue, New York, NY10017 USA.

Kais, M. (2017). Impact of external audit quality on the relevance of accounting profits:Case of listed
Tunisian companies. Journal of Economic & Financial Research, 4(2), 786-787.

TAMAR, K. (2017). the external auditing profession in Algeria and comparing with the Maghreb countries
(Algeria, Tunisia and Morocco ). journal of financial, accounting and managerial studies.

Ullah, A. (2015) ISA 520 Summary Analytical procedures

 ISA 570 Going Concern – Effective date 15 December 2009

ISA 570 Going concern Requirements

ISA 570 Scope
ISA 570 deals with the auditor’s responsibilities in the audit of financial statements relating to
management’s use of the going concern assumption in the preparation of the financial statements Ullah,
A. (2015).

ISA 570 Objective
Under ISA 570 objective of auditor are Chen, K.W. and Church, B.K. 2017):

 To obtain sufficient appropriate audit evidence regarding the appropriateness of management’s

use of the going concern assumption in the preparation of the financial statements;
 To conclude, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the entity’s ability to continue
as a going concern; and
 To determine the implications for the auditor’s report.

Application and Other Explanatory Material

ISA 7017 deals with the auditor’s responsibility to communicate key audit matters in the auditor’s
report. That ISA acknowledges that, when ISA 701 applies, matters relating to going concern may be
determined to be key audit matters, and explains that a material uncertainty related to events or
conditions that may cast significant doubt on the entity’s ability to continue as a going concern is, by its
nature, a key audit matter (Behn, B.K., Kaplan, S.E. and Krumwiede, K.R. 2001).

Requirement

the auditor shall consider whether events or conditions exist that may cast significant doubt on the
entity’s ability to continue as a going concern. l evaluate management’s assessment of the entity’s
ability to continue as a going concern. inquiry of management as to its knowledge of events or
conditions beyond the period of management’s assessment that may cast significant doubt on the
entity’s ability to continue as a going concern. If events or conditions have been identified that may cast
significant doubt on the entity’s ability to continue as a going concern, the auditor shall obtain sufficient
appropriate audit evidence to determine whether or not a material uncertainty exists related to events
or conditions that may cast significant doubt on the entity’s ability to continue as a going concern
(hereinafter referred to as “material uncertainty”) through performing additional audit procedures,
including consideration of mitigating factors. Lastly, t he auditor shall evaluate whether sufficient
appropriate audit evidence has been obtained regarding, and shall conclude on, the appropriateness of
management’s use of the going concern basis of accounting in the preparation of the financial
statements. Based on the audit evidence obtained, the auditor shall conclude whether, in the auditor’s
judgment, a material uncertainty exists related to events or conditions that, individually or collectively,
may cast significant doubt on the entity’s ability to continue as a going concern ( LaSalle and
Anandarajan, 1996).

ISA 570 – Going Concern Assumption

Under the going concern assumption, an entity is viewed as continuing in business for the foreseeable
future. General purpose financial statements are prepared on a going concern basis, unless
management either intends to liquidate the entity or to cease operations, or has no realistic alternative
but to do so ( Bava, F. & Trana, M.G. (2018).
Special purpose financial statements may or may not be prepared in accordance with a financial
reporting framework for which the going concern basis is relevant
When the use of the going concern assumption is appropriate, assets and liabilities are recorded on the
basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of
business (Carcello and Neil, 2020).
 

References:

Bava, F. & Trana, M.G. (2018) ISA 570: Italian Auditors’ and Academics’ Perceptions of the Going
Concern Opinion. First published 2018.

Behn, B.K., Kaplan, S.E. and Krumwiede, K.R. 2001, ‘FurtherEvidence on the Auditor’s Going-concern
Report: The Influ-ence of Management Plans’, Auditing, 20 (1): 13–28.

Carcello, J.V. and Neal, T.L. 2020, ‘Audit Committee Compo-sition and Auditor Reporting’, The
Accounting Review,75(4):453–67.

Chen, K.W. and Church, B.K. 2017, ‘Default on Debt Obliga-tions and the Issuance of Going-concern
Opinions’, Auditing:A Journal of Practice and Theory, 11 (Fall): 30–49

LaSalle, R. and Anandarajan, A. 2016 vb, ‘Auditors’ Views on theType of Audit Report Issued to Entities
with Going ConcernUncertainties’, Accounting Horizons, 10 (2): 51–72.

This International Standard on Auditing (ISA) deals with the auditor’s responsibility to obtain written
representations from management and, where appropriate, those charged with governance in an audit
of financial statements. 2. Appendix 1 lists other ISAs containing subject-matter specific requirements
for written representations. The specific requirements for written representations of other ISAs do not
limit the application of this ISA (Collings, S.T (2011).

The objectives of the auditor are (Ahmad, O. (2007):

(a) To obtain written representations from management and, where appropriate, those charged with
governance that they believe that they have fulfilled their responsibility for the preparation of the
financial statements and for the completeness of the information provided to the auditor;
(b) To support other audit evidence relevant to the financial statements or specific assertions in the
financial statements by means of written representations if determined necessary by the auditor or
required by other ISAs; and
(c) To respond appropriately to written representations provided by management and, where
appropriate, those charged with governance, or if management or, where appropriate, those charged
with governance do not provide the written representations requested by the auditor.

Requirements
The auditor shall request written representations from management with appropriate responsibilities
for the financial statements and knowledge of the matters concerned; Request management to provide
a written representation that it has fulfilled its responsibility for the preparation of the financial
statements in accordance with the applicable financial reporting framework, including, where relevant,
their fair presentation, as set out in the terms of the audit engagement.
The auditor shall request management to provide a written representation that (Simon, D. T./Francis, J.
R. (1988): (a) It has provided the auditor with all relevant information and access as agreed in the terms
of the audit engagement;3 and
(b) All transactions have been recorded and are reflected in the financial statements.

Other ISAs require the auditor to request written representations. If, in addition to such required
representations, the auditor determines that it is necessary to obtain one or more written
representations to support other audit evidence relevant to the financial statements or one or more
specific assertions in the financial statements, the auditor shall request such other written
representations.

Application and Other Explanatory Material

Written statements are a valuable source of audit evidence. If management alters or fails to produce the
requisite written representations, the auditor may be alerted to the probability of one or more major
concerns. Furthermore, in many circumstances, requesting written representations rather than oral
representations may push management to think about such issues more thoroughly, thereby improving
the quality of the representations (Wong, P. H. Y. (2004).

Without assurance from management that it believes it has fulfilled the responsibilities linked to in
paragraphs 10 and 11, audit evidence acquired during the audit is insufficient. This is because the
auditor cannot determine whether management has prepared and presented financial statements and
supplied information to the auditor on the basis of the agreed acknowledgement and understanding of
its responsibilities only on the basis of other audit evidence. (Garcia-Benau, M. A./Zorio, A. (2004):.

In a representation letter addressed to the auditor, written representations must be included. However,
in some areas, management may be forced to issue a written public declaration about its duties by law
or regulation. Despite the fact that such a statement is a representation to financial statement users or
relevant authorities, the auditor may decide that it is an appropriate form of written representation for
part or all of the representations required by the standard. (Romano, R. (1998a).

References:

Ahmad, O. (2007) Auditors Comppliance with International Standards on Auditing (ISAs): Evidence from
Jordan. Journal of Social Sciences 3 (4): 185-189. Tafila, Jordan

Collings, S.T (2011) Interpretation and application of International standards on auditing. 2011 edition.
A John Wiley and Sons, Ltd, Publication.

Garcia-Benau, M. A./Zorio, A. (2014): Audit Reports on Financial Statements Prepared According to IASB
Standards: Empirical Evidence from the European Union. In: International Journal of Auditing, 8 (3): 237-
252.

Romano, R. (2018a): Empowering Investors: A Market Approach to Securities Regulation, In: Yale Law
Journal, 107 (8): 2359-2430.

Simon, D. T./Francis, J. R. (2018): The Effects of Auditor Change on Audit Fees: Tests of Price Cutting and
Price Recovery. In: The Accounting Review, 63 (2): 255-269.

Wong, P. H. Y. (2014): Challenges and Successes in Implementing International Standards: Achieving

Convergence to IFRSs and ISAs (September 2004). URL:
http://www.ifac.org/Members/Source_Files/Other_- Publications/Wong_Report_Final.pdf, status:
13.06.2008.