The UK Endorsement Board, which oversees accounting rules, is preparing to come to heads with insurers in the first major test of the new body, according to reports.
The UK Endorsement Board (UKEB) was formed in direct response to Britain’s exit from the European Union, which forced the country to manage and endorse international accounting rules itself – something Brussels was previously responsible for.
UKEB was braced for a “lot of noise” from the insurance sector about measures to increase transparency of financial performance interim chair, Pauline Wallace, told Reuters, which first reported the news.
“We are running against quite a tight deadline,” said Wallace, referring to a UKEB consultation planned for next month, on whether or not to endorse the insurance accounting rule IFRS 17 – which will come into effect globally in January 2023.
If UKEB does endorse the rule, it will mark a massive change for the £1.7tn sector, according to Reuters.
The body could however decide not to endorse the rule, though Wallace called this the “nuclear option”.
“The insurance industry is very good at making their views known,” said Wallace, adding: “Insurance companies are not the only stakeholders in this. Investors are very keen to see better accounting in insurance.”
IFRS rules, written by the global Accounting Standards Board (IASB), are used in over 140 jurisdictions and are normally endorsed at a national level.
The UKEB’s consultation will centre around whether or not IFRS should be endorsed and, if so, if it should be applied as written by the IASB.
Factors such as the impact on the UK economy and its competitiveness with Europe, and on the global market, will likely be considered as part of the UKEB’s review.