Thursday, September 4th, 2025
This article provides an insightful overview of the issues around determining the time value of money, i.e. the discounting in the IFRS 17 accounting framework. The concept of discounting future cash flows has not been consistently applied in previous standards, e.g. many non-life insurance companies did not discount their reported claims reserves in order to include a conservative margin. In IFRS 17, discounting is consistently applied to any long-term cash flows. The discount rates are supposed to reflect any financial risks whereas an explicit margin for non-financial risks – the so-called Risk Adjustment – is added to the liabilities. In several markets, deriving reasonable discount rates is challenging given the limited availability of suitable market data.
Read More: https://magazine.accountancysa.org.za/asa-september-2025/page-50
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