Reporting in line with different accounting standards

Insurance companies that are listed or issue listed securities have to submit financial reports in line with IFRS. Big and medium-sized mutual insurance companies, too, that do not face any regulatory pressure to comply with IFRS increasingly adapt their financial reporting system to the international context. Against this backdrop, the issue of multi-GAAP accounting becomes more and more important for insurance companies.

Financial reporting in line with different accounting standards requires a clear separation of data for each accounting system. There are several options for ensuring this differentiation and the separate analysis of all data:

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When deciding on the alternative to be used for multi-GAAP accounting, several influencing factors have to be considered:

• Leading accounting standard
  For each alternative solution, you have to determine the leading accounting standard with regard to the preparation of financial statements.
• Representing differences between accounting standards
  On principle, different accounting standards use different approaches and valuation methods. Here, you have to decide whether you only want to have a separate posting on the difference between the accounting standards or whether there should be two independent postings.
• Company-specific factors
  In addition to technical feasibility, you also have to take account of specific influencing factors within your company when selecting a alternative:
  • How flexible is a solution with a view to the technical framework?
  • Which options are available for reconciliation between the accounting standards?
  • Is it necessary to consider performance aspects?

The right implementation of multi-GAAP accounting may bring cost and benefit advantages from the perspective of the IT unit and the functional division using the system. From the IT perspective,

• the number of accounting documents and the required hardware capacity can be significantly reduced if only one document is created for cases treated identically in all the accounting standards;
• data consistency can be better checked within a system.

From the perspective of the functional division, the right multi-GAAP accounting alternative can contribute to:

• simplifying reconciliation and transfer between the accounting standards;
• reducing the time needed for drawing up financial statements if multi-GAAP accounting is easy to handle.