The Nation Newspaper

Tag: accounts’

  • Underwriters battle to produce IFRS compliant accounts

    •Only three firms sent in drafts, says NAICOM

    Underwriters are battling to beat the six months deadline given by the National Insurance Commission (NAICOM) within which they are expected to submit their audited and approved International Financial Reporting Standard (IFRS) compliant accounts.

    NAICOM said out of the 60 insurance and re-insurance firms in operation, only three have sent their IFRS draft accounts to the Commission three months to the deadline for submission of 2012 financial reports which must be IFRS compliant.

    The Director, Supervision, NAICOM, Nicholas Opara, who disclosed this during a meeting in Lagos, said the drafts have been returned to the companies as there are still areas to be worked on after necessary observations made by the Commission.

    He said last year’s financial reports of operators are special to the industry, as they are expected to herald the migration to the new IFRS regime.

    He said: “At the moment, no company has submitted full IFRS compliant account. It is only three companies that have sent in their drafts which we have returned to them, as there are still many things they are yet to get right. The 2012 reports are special because it is different from what we have been doing in the past.”

    According to a roadmap to guide companies’ on transition to IFRS, insurance and reinsurance companies are classified under public interest entities and were expected to start their transition from January 1, 2011, while the insurance brokers, classified under other public interest entities, were to take their turn in 2012.

    The transition from the National Standard to IFRS was endorsed by the Federal Government on July 28, 2010, to take effect from January 1, 2012.

    On efforts to ensure the actualisation of the IFRS initiative, the Commissioner for Insurance, Fola Daniel, said NAICOM has been engaging operators, auditors, directors and management of companies on how to seamlessly migrate to the initiative.

    He said two main outcomes have been reached by NAICOM and stakeholders on the initiative, adding that it was agreed that the market should adopt common approach to IFRS provided that such option will not place any individual company or the market at a competitive disadvantage domestically and internationally.

    He said the second issue, was that an accounting practices committee made up of the representative of NAICOM, insurers/reinsurers and external auditors should be set up to address all accounting issues of concern to the industry, including those emerging from IFRS standard setting processes.

    He explained that the Board of Directors of each company would be responsible for the issuance of financial statements, adding that both transition and sustenance of IFRS in accounting practices, should be a major item on directors’ agenda at this time.

    Daniel noted that NAICOM’s decision to engage stakeholders was informed by the need not only to create awareness of the implication of IFRS for financial reporting responsibilities, but also to acquaint them with the scale of change and the sense of urgency in the attention it deserves.

    “Our expectation is that at the end of our engagements, the stakeholders will have sufficient level of understanding as to know what critical questions to ask and what steps to take in the bid to ensure that their companies successfully transit to and imbibe IFRS in their accounting practices within the timelines specified in the Nigerian Roadmap.”

    He said NAICOM has established IFRS help desk in the commission to address issues that companies may have in the process of transiting to the new scheme..

    He said NAICOM has succeeded in significantly improving the level of compliance with the Nigerian GAAP by getting some companies to amend their financial statements to reflect a standard we believe all operators should comply with, if their financials will be relevant and useful to both domestic and international users.”

    Daniel said the feedback received from many users has been encouraging.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • PFAs pay N12b into life annuity accounts

    PFAs pay N12b into life annuity accounts

    Pension Fund Administrators (PFA) paid N12.09 billion to some life insurance companies for life annuity bought by retirees as at December 31, last year.

    Speaking on Issues arising from marketing of retirement annuities, at a workshop in Lagos, the Head of Benefits and Insurance, National Pension Commission, Mr Olulana Loyinmi, said Section Four of the Pension Reform Act 2004 provides that an employee can, on retirement, make withdrawals from his Retirement Savings Account (RSA).

    Such withdrawal, he said, could be monthly or quarterly based on his life expectancy of life annuity bought from a life insurance company.

    He said the retired worker can as also withdraw a lump sum from the balance in his RSA account provided that the amount left in the account after the withdrawal is enough to fund the life annuity or a programmed withdrawal of not less than 50 per cent of his yearly remuneration at the date of retirement.

    He explained that retirement by life annuity under contributory pension scheme started in 2010, adding that as at last year, only 10 life assurance firms in the country were licensed to transact retirement annuity business.

    The PenCom official stated that as at the end of 2012, 2,343 retirees were on annuity, while the total life annuity premium paid amounted to N12.09 billion and total monthly pension by annuity averaged N118.06 million.

    The Acting Director-General of PenCom, Mrs Chinelo Anohu-Amazu, said a major challenge facing annuity business in the country is inadequate sensitisation and public enlightenment on the expectations from stakeholders.

    She said annuity is a contract between the annuitant and a service provider, usually an insurance company for the payment of an agreed amount of money at given intervals to the annuitant. She said there are different types of annuity, but the one recommended under the Pension Reform Act 2004, is life annuity, which seeks to guarantee income for retirees until they die.

    Mrs. Amazu said life annuity, one of the modes of withdrawing retirement benefits under the pension reform law is a regular income received from a life insurance firm in consideration for payment of premium, or transfer of the accumulated savings standing in the retirement savings of a worker or part of it at the time of retirement.

  • ‘Why we can’t get oil, gas accounts’

    • Firms blame NNPC for blocking them

    Insurance brokersare groaning under the weight of hurdles placed on their path for oil and gas accounts by the Nigerian National Petroleum Corporation (NNPC).

    A source, who preferred not to be named, said the hurdle, restrains insurers from qualifying for risks allotted to local brokers by the Nigerian Content Policy.

    The source said 34 brokers were engaged for the NNPC lucrative account last year, but the number was reduced to 14 this year. The number may also go down next year, it was learnt.

    President, Nigerian Council of Registered Insurance Brokers (NCRIB), Mrs Laide Osijo, said the corporation has subjected brokers to enormous demands.

    She said the operators are worried because they thought they would acquire more knowledge as they grow on the business, but regretted that the reverse is the case now, as they are not given the opportunity to improve their knowledge on the job.

    She said: “Honestly, in the area of oil and gas, the Nigerian Content Policy made provision for local operators to be trained, so that the business could be handed over to us. But what the oil and gas operators are doing is contrary to what is expected.

    “What they are asking for was never envisaged when the law was provided.The NNPC is really putting more demand on brokers. We are worried because we thought we would acquire more knowledge as we grow in the business, but reverse is the case.

    “We have undertaken oil and gas training at home and abroad, but with the restrain by the oil and gas operators, we can never put to test what we learnt. With the things they are asking for, hardly can 10 brokers or even five qualify for the business. If they are doing it intentionally, where do we then put the local content law?”

    She said the operators were supposed to be trained so that the foreigners would hand over the businesses to them, adding that if the operators are not given the practical training and exposure, how they would learn.

    “The oil and gas operators have been unfair, but we will continue to strive until we get there. The first time they did it we had 34 brokers engaged, and the next one we had 14. We thought after getting 34, we would have higher rate, but they went and reduced it. This year, they put so many conditions and at the end only few brokers will also be engaged.

    “It is unfair to the local content law. The local content law is there to protect us and put food on our table, but the way they are asking for some many things, it is really disturbing. We will continue to strive to meet their demands.’’

    Laide further said: “Honestly, the brokers are complaining. They are not happy about it; most of them have paid so much to certified many documents. Corporate Affairs Commission (CAC) gave us certification, but NNPC still want us to recertify it and they would give us short notice within which they want us to implement these things”.

    She noted that many brokers have written petitions to her office about the roadblocks placed by the NNPC for qualification, adding that the corporation is not given brokers fair treatment.