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IFRS 17Workpapers (Step 4 of 5)

Workpaper assignment

Step 4 of 5
Mission · workpaperWorkpaper · IFRS 17L4 · Expert

Documents

Company profile and case conventions

Memo

Company profile and case conventions

Sorvalis Assurances SA (fictitious entity) closes its accounts on 31 December 20X6, in EUR. Case conventions (pedagogical assumptions, not attributed to IFRS 17): annual discount rate of 5% for all flows, flows at year end, each flow discounted separately; risk adjustment given; share of 50% of the coverage units for the first year of group G1; acquisition cash flows of G3 expensed; the claims of G1 for the year are as expected; the entry of each group is illustrative. For G1, the six entries of the file record only the first premium flow and the release of the margin: claims, the release of the risk adjustment and the unwinding of the discount (including the interest on the margin, EUR 850) have no entry in the file.

Contractual service margin roll-forward: interest at the locked-in rate, changes relating to future service, release by coverage units and loss component

File on a group of insurance contracts: aggregation, initial measurement, contractual service margin, simplified approach and presentation (IFRS 17)

7 documents9 sections to document
0 / 6 sections completed
Guided mode

Section 1 of 9

Objective

In progress
Section brief
What to document
The engagement, its scope and the working mode chosen.
Why
A workpaper answers one precise question: framing it avoids off-topic work.
How
Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
Expected result
You know which question the workpaper must settle, and for which reporting date.
Your role
Preparer of the IFRS 17 workpaper
Level
Expert
Estimated time
≈ 90 min
Progress
0 / 5 steps done (review excluded)

Context

Sorvalis Assurances SA (fictitious entity) closes its accounts on 31 December 20X6; the financial statements will be authorised for issue on 28 February 20X7. The preparer builds the file for the first application of IFRS 17 for the group protection portfolio (two groups) and for a one-year travel insurance group. The file is reviewed by a reviewer before sign-off. Teaching simulation: the review trail of the file (preparation, reviewer notes and final sign-off) is simulated for demonstration purposes; it is neither a real review nor a validation of the content.

Assignment

Margin roll-forward of G1

Purpose of the workpaper

Record the opening margin, the locked-in rate of the group, the changes relating to future service and the share of coverage units of the period: this share is case data. Compute the interest, the margin before release, the release and the closing margin, then record the release as insurance revenue. For an onerous group, compute the reversal of the loss component, capped at its balance. For proportionate cover of an onerous underlying group, compute the loss recovery; at transition, under the fair value approach, compute the margin as the fair value less the fulfilment cash flows (case data).

Questions of the file covered by this workpaper

  • G1: compute the interest on the margin of the year.
  • G1: compute the margin before release.
  • Are the coverage unit and the 50% share defensible, and what to do for the second year?
  • G1: compute the release of the period.
  • G1: compute the closing margin.
  • G1: record the release of the margin to insurance revenue.

Documents in the file

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