Preparation & Presentation of Financial Statements of IIOS: IFSCA

Preparation & Presentation of Financial Statements of IIOS: IFSCA

The International Financial Services Authority has issued a discussion paper to seek comments and opinions of the general public on the new IFSCA (Preparation & Presentation of Financial Statements of IIOS) Regulations, 2022. IFSCA is the unified regulator for maintaining the development and regulation of fintech and financial products in the Indian Market. To facilitate the growth and maintenance of the regulatory framework in the insurance and reinsurance sector, IFSCA, from time to time, has issued various regulations. To maintain a healthy business environment and strengthen the industry’s regulatory framework, IFSCA has prepared a comprehensive guideline for the Preparation and Presentation of Financial Statements of IIOs operating in India or abroad.

Objective and Applicability of the Act

The provisions in these regulations apply to the International Financial Service Centre Insurance Offices (IIOs) registered with IFSCA under the IFSCA (Registration of Insurance Business) Regulations 2021. The objective behind the development and regulation of these broad guidelines is to put in place the process of preparation and presentation of Financial statements of IIOs.

Key Definitions

The key definitions put forth in the draft regulations are as follows;

Accounting Year:

  • For any IIO that is unincorporated, the financial year shall be decided on the pattern followed by its parent company
  • For any IIO incorporated under IFSCA, the accounting period shall be 12 months, starting from 1st April to 31st March.

Insurance Contract:

An insurance contract refers to the mutual understanding between the parties, under which one party (insurer) accepts significant insurance risk from another party (the policyholder) under which it agrees to pay the second party the agreed sum of money that is agreed on the happening of an uncertain event in the future.

Parent Entity:

A parent entity is defined as a company that holds and manages the function of the IIOs that are unincorporated with IFSCA. In the case of an unincorporated IIO, the rules and regulations followed by the parent company are preferred over the regulations set for the IIOs incorporated by the IFSCA.

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General Instructions for Preparation of Financial statements of IIOs

The first chapter of the draft regulations deals with the general instructions for preparing and presenting Financial Statements of IIOs.

  1. Applicable Accounting Standards
    1. The unincorporated IIOs have to furnish and present their financial statements of IIOs in accordance with the accounting standards which apply to the Parent Entity.
    2. The incorporated IIOs must follow the accounting standards issued by the Institute of Chartered Accountants of India (ICAI). The following are the exception to this rule;
      • Cash Flow statements are to be prepared under the Direct method provided in AS3. 
      • Segment reporting should be prepared according to AS 17, irrespective of the requirements related to listing and turnover methods.
      • The accounting for investments shall be done in accordance with the AS 13 for the businesses engaged in Life Insurance Business.
  2. The authority has the power to demand a transition of accounting systems to IFRS in due course.
  3. IIOs primarily engaged in Life Insurance, the Composite of life general and health insurance business, have to furnish the information as specified in Schedule A, attached with the regulations.
  4. IIOs engaged in the business of General Insurance, health insurance, a composite business of general and health insurance, or reinsurance business shall adhere to the accounting principle, standards and requirements specified under Schedule B here under
  5. IIOs falling in the category of Schedule A and Schedule B also have to adhere to the attached Schedule C
  6. The IIOs have to specifically mention the Accounting Standards that have been followed in the preparation and presentation of the Financial statement.
  7. A detailed statement of the accounting policies applied by the IIOs has to be included with the financial statement presented by the IIOs.
  8. IIOs have to furnish a detailed statement of accounting policies applied to each and every financial statement of IIOs.
  9. Mandatory disclosure of all the changes made to the accounting standard and policies and their impact on head-wise financial data of the business.
  10. The contracts that fall into the definition of the insurance contract shall be disclosed and reported separately.
  11. The financial reporting submitted by the IIO should be in USD unless otherwise specified by the authority.
  12. Following is an indicative list of financials to be furnished by the IIO incorporated under IFSCA.
    1. The annual report should contain the following;
      • Report of Board of Directors
      • Report on Management Discussion and analysis
      • Report on Risk Management
      • Report on Corporate Governance
      • Report of certified External Auditor
      • Independent or otherwise Certified Actuarial Report
    2. The annual report should be submitted within 90 days from the end of the financial year.
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Maintenance of Books of Accounts, Documents and Records

Chapter 3 of the draft resolution provides the following guidelines for the financial statements of IIOs;

  1. The IIOs shall preserve and maintain the following books of accounts, documents and Records in electronic form for a period of 20 years.
    • Balance Sheet
    • P&L Statement maintained on an accrual basis
    • Details of the revenue account
    • Cash/Fund Flow Statement
    • Any other books of accounts that are related to the business as specified by the authority from time to time
  2. The funds of policyholders and shareholders shall be kept separate by the IIO.
  3. The books and all other relevant information shall be readily available with IIO for any inspection by the authority.
  4. The books of account and other relevant documents shall be retained by the IIO for at least seven years, as refereed in the regulation. In case there is any pending suit for the said books, then all the information should be retained up to the pendency of the suit. It is pertinent to mention here that in the case of reinsurance, all the documents must be preserved by the IIOs until their validity.
  5. IIOs have to disclose all the related party transactions in their audited financial statements.
  6. Al the data should be maintained in electronic form by the IIO and shall be held in data centres located and maintained in India. The IIO has to make sure that all the data stored has to be readily available for inspection by the regulatory authority.

Miscellaneous Provisions on

Chapter 4 of the draft regulations provides the following regulations;

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Power to specify Procedure

The authority has the power to notify and specify procedures, norms, processes and manners of compliance to the IIOs for implementation, facilitation, regulation and presentation of financial statements of IIOs.

Power to remove difficulties and relax enforcement of regulations

  1. The authority has the power to issue clarifications to remove any difficulties faced by the entities in the application or interpretation of the provisions of these regulations
  2. On receiving the application fees and non-refundable fees, the authority may, in writing, relax the strict implementation of any provision of the regulation.

Inspection, Information, investigation and Disclosures

The authority shall have the power to investigate the day-to-day affairs of the IIOs, including the parent entity of unincorporated IIOs, for any information or disclosures to be made in the financial statements of IIOs.


These draft regulations are places on the website of IFSCA to invite comments and suggestions from the General Public and various stakeholders. Suggestions are invited till 12th December 2022 in the manner prescribed in the draft regulations. These guidelines will encourage the preparation and preparation of financial statements of IIOs procedurally in line with best international practices, which will bring about much-needed transparency in the financial reporting of the IIOs. The financial statement mentioned in the draft regulations shall be prepared by the end of each financial year by the IIO, with comparative data from each preceding year for a better presentation of the financial records.

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