TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Preparation and Presentation of Financial Statements of International Financial Service Centre Insurance Offices) Regulations, 2022
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....22. (2) They shall come into force on the date of their publication in the Official Gazette. 2. Applicability These regulations shall be applicable to International Financial Service Centre Insurance Offices (IIOs) registered with the Authority under International Financial Services Centres Authority (Registration of Insurance Business) Regulations, 2021. 3. Objective - These regulations aim to put in place the process of preparation and presentation of financial statements of the International Financial Service Centre Insurance Offices (IIO). 4. Definitions - (1) In these regulations, unless the context otherwise requires - (i) 'Act' means the International Financial Services Centres Authority Act, 2019 (50 of 2019); (ii) 'accounting year'- a. In relation to an IIO set up in an unincorporated entity form, shall refer the financial year followed by its parent entity; b. In relation to an IIO set up in an incorporated form, shall refer to a period ending on the 31st March every year; (iii) 'Authority' means the International Financial Services Centres Authority established under sub-section (1) of Section ....
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....7 of International Financial Services Centres Authority (Registration of Insurance Business) Regulations, 2021, instead of 'share capital'. (2) Words and expressions used and not defined in these regulations but defined in the Act or Acts mentioned in the First Schedule to the Act or any rules, regulations made thereunder, shall have the same meaning respectively assigned to them in those Acts, rules or regulations or any statutory modification or re-enactment thereto. CHAPTER - II GENERAL INSTRUCTIONS FOR PREPARATION & PRESENTATION OF FINANCIAL STATEMENTS 5. Applicable 'Accounting Standard' or "AS" (1) An IIO set up in an unincorporated form, shall prepare its financial statements in accordance with the accounting standards applicable to its Parent Entity. (2) An IIO set up in an incorporated form, shall prepare its financial statements in accordance with the accounting standards issued by the Institute of Chartered Accountants of India (ICAI), except that: (i) Cash Flow Statements shall be prepared only under the Direct Method as provided under Accounting Standard 3 (AS 3); (ii) Segment Reporting shall be prepared in accordanc....
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....losures of all related party transactions in its audited financial statements. 14. Any contract not covered under 'insurance contract', as defined in regulation 4(1)(iv) above, shall be reported and disclosed separately. 15. Separation of Funds (1) All IIOs shall keep separate accounts of shareholders' funds and policyholders' funds in a manner as may be specified by the Authority. (2) All IIOs shall ensure that the investments allocated to the policyholders shall not be less than the value of the policyholders' fund. CHAPTER - III MAINTENANCE OF BOOKS OF ACCOUNTS, RECORDS AND DOCUMENTS 16. An IIO shall maintain and preserve the following documents as may be specified by the Authority in electronic retrieval form- (1) balance sheet as at the end of each accounting year; (2) profit and loss account for each accounting year, which shall be maintained on accrual basis; (3) revenue account; (4) statement of cash/fund flow (direct method); and (5) such other books of accounts, records and documents related to its business activities, as may be specified by the Authority from time to time. 17. All books of a....
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....mmencement of these regulations, shall comply with additional requirements stipulated in these regulations, within a period of six (6) months from the date of commencement of these regulations or within such extended time as may be specified by the Authority. SCHEDULE- A [Refer Regulation 6(1)] PART- I Accounting Principles for Preparation and Presentation of Financial Statements 1. IIOs shall adhere to the following general accounting principles while preparing financial statements: (1) Premium: Premium shall be recognised as income when due. For linked business, the due date for payment may be taken as the date when the associated units are created. (2) Acquisition costs: Acquisition costs, if any, directly attributable to the policy shall be expensed over the contract period or period of risk on the policy. The unexpired portion of the policy shall be deferred and recognised as Deferred Acquisition costs and expensed in subsequent periods. Explanation: Acquisition costs are the costs that vary with and are primarily related to the acquisition of new and renewal insurance contracts. The most essential test is the obligatory relationship b....
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.... (iv) The bases for revaluation shall be disclosed in the notes to accounts. The Authority may issue directions specifying the amount to be released from the Revaluation Reserve for declaring bonus to the policyholders. For the removal of doubt, it is clarified that except for the amount that is released to policyholders as per the Authority's direction, no other amount shall be distributed to shareholders out of Revaluation Reserve. (2) Debt Securities: Debt securities, including government securities and redeemable preference shares, shall be considered as "held to maturity" securities and shall be measured at historical cost subject to amortisation. In case of any downgrade in the rating of the debt securities, which results in a decrease in the accounted value, the possible impact of the same on the balance sheet shall be disclosed in the 'Notes to Account'. (3) Listed Equity Securities and Derivative Instruments that are traded in active market: (i) Listed equity securities and derivative instruments that are traded in active markets shall be measured at fair value on the balance sheet date. Explanation: For the purpose of calculat....
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....ed at historical cost. Provision shall be made for diminution in value of such investments. The provision so made shall be reversed in subsequent periods if estimates based on external evidence show an increase in the value of the investment over its carrying amount. The increased carrying amount of the investment due to the reversal of the provision shall not exceed the historical cost. (5) Loans: Loans shall be measured at historical cost subject to impairment provisions. The IIO shall assess the quality of its loan assets and shall provide for impairment. (6) Loans Secured by Insurance Policies Issued by the IIO: Valuation of a loan secured by an insurance policy issued by the IIO must be as the amount of the loan but not exceeding the amount payable on a surrender or early termination of the policy as at the date the policy is being valued. (7) Linked Business: A separate set of financial statements, for each segregated fund of the linked businesses, shall be annexed. Explanation: The fund earmarked in respect of Unit Linked business would be referred to as segregated fund. (8) Funds for Future Appropriation: The funds for future app....
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....disclosed: (1) Investments made in accordance with any statutory requirement shall be disclosed separately together with its amount, nature, security and any special rights; (2) Segregation into performing/ non-performing investments for purpose of income recognition as per the directions, if any, issued by the Authority; (3) Percentage of business sector-wise and geography-wise; (4) A summary of financial statements for the last five years, in the manner as may be specified by the Authority; (5) Bases of allocation of investments and income thereon between Policyholders' Account and Shareholders' Account; (6) Accounting Ratios as may be specified by the Authority. 3. The notes to accounts shall provide, where required, (1) narrative descriptions or disaggregation's of items recognized in the Financial Statements; (2) information about items that do not qualify for recognition in Financial Statements. SCHEDULE- B [Refer Regulation 6 (2)] PART- I Accounting Principles for Preparation & Presentation of Financial Statements 1. Notwithstanding anything contained in the applicable Accounting Standa....
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.... account in respect of both direct business and inward reinsurance business. The liability shall include: - (i) Future payments in relation to unpaid reported claims; (ii) Claims Incurred But Not Reported (IBNR) including inadequate reserves (sometimes referred to as Claims Incurred But Not Enough Reported (IBNER)) which will result in future cash/asset outgo for settling liabilities against those claims. Explanation: Change in estimated liability represents the difference between the estimated liability for outstanding claims at the beginning and at the end of the accounting period. (3) The accounting estimate shall also include claims cost adjusted for estimated salvage value if there is sufficient degree of certainty of its realisation. 7. Actuarial Valuation of claim liability (1) Estimate of claims made in respect of contracts shall be recognised on an actuarial basis, subject to provisions of the relevant Accounting Standards and certificate from an appointed actuary as to the fairness of liability assessment shall be obtained. (2) Actuarial assumptions shall be suitably disclosed by way of notes to the account. 8. N....
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.... value previously recognised in equity under the heading "Fair Value Change Account' in respect of a particular security and being recycled to the relevant Revenue Account or Profit and Loss Account on actual sale of that listed security. (v) The Authority may issue directions specifying the amount to be released from the Fair Value Change Account for declaring bonus to the policyholders. Explanation: it is clarified that except for the amount that is released to policyholders as specified by the Authority, no other amount shall be distributed to shareholders out of Fair Value Change Account. Also, any debit balance in Fair Value Change Account shall be reduced from profit/ free reserves while declaring dividends (vi) The IIO shall assess, on each balance sheet date, whether any impairment has occurred. An impairment loss shall be recognised as an expense in Revenue/Profit and Loss Account to the extent of the difference between the re-measured fair value of the security/investment and its acquisition cost as reduced by any previous impairment loss recognised as expense in Revenue/Profit and Loss Account. Any reversal of impairment loss, earlier recog....