The insurance regulator IRDAI has deferred the implementation of Indian Accounting Standards (IndAS) for two years, pushing their implementation to April 2020.
The board of the IRDAI came to the conclusion that while the implementation of the IndAS in the present form will lead to the valuation of assets at fair value or market value, liabilities will continue to be valued using the existing formula-based approach. Hence, a mismatch would occur in asset and liability valuation causing volatility in the financial statements of the insurance companies.
At the same time, the issuance of International Financial Reporting Standards 17 (IFRS17) by the International Accounting Standards Board in May 2017 has led the IRDAI to review the position on the implementation of IndAS in the insurance sector. IFRS17 is to take effect on 1 January 2021.
In 2015, the Ministry of Corporate Affairs had laid down the road map for the implementation of IndAS for the insurance sector under which insurers would have been required to prepare IndAS-based financial statements for accounting periods beginning from 1 April 2018, with one-year comparatives.