2022 AVBOB Integrated Annual Report - FINANCIALS

CHAPTER 8 | FINANCIAL STATEMENTS 106 INTEGRATED ANNUAL REPORT 2022 AVBOB MUTUAL ASSURANCE SOCIETY AND ITS SUBSIDIARIES NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2022 1. General information 2. Basis of preparation 3. Accounting policies The assessment of the expected impact of the implementation of IFRS 17 included the following: The Group has not early adopted any of these standards or interpretations. Except for the impact of IFRS 17, which has not as yet been fully determined, the application of the standards and interpretations are not expected to have a significant impact on the Group's reported results, financial position and cash flows. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of the standard. It will replace the current standard, IFRS 4 that allows insurers to use their local GAAP. IFRS 17 defines clear and consistent rules that are intended to increase the comparability of Financial Statements. Under IFRS 17, the General Measurement Model (GMM) requires entities to measure an insurance contract at initial recognition at the total of the fulfilment cash flows (comprising the estimated future cash flows, an adjustment to reflect the time value of money and an explicit risk adjustment for non-financial risk) and the contractual service margin. The fulfilment cash flows are remeasured on a current basis at each reporting period. The unearned profit (contractual service margin) is recognised over the coverage period. Aside from this GMM, the standard allows, as a simplification, the Premium Allocation Approach (PAA). This simplified approach is applicable for certain types of contracts, including those with a coverage period of one year or less. For insurance contracts with GMM direct participation features, the variable fee approach applies. The variable fee approach is a variation on the GMM. When applying the variable fee approach, the entity's share of the fair value changes of the underlying items is included in the contractual service margin. As a consequence, the fair value changes are not recognised in profit or loss, but rather in the statement of comprehensive income. The accounting policies adopted are consistent with those of the previous financial year. The standard combines current measurements for the future cash flows with the recognition of profit over the service period under the contract. The standard mandates the presentation of insurance revenue separately from insurance finance income or expenses, and requires an entity to make various accounting policy choices, including whether to recognise all insurance finance income or expenses in profit or loss or to recognise some of that income or expenses in other comprehensive income. The Group has applied the provisions of the Companies Act, no 71 of 2008, which allows for summarised financial results as disclosed in this report. The summarised financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2022, which have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), IAS 34 Interim financial statements and the requirements of the Companies Act of South Africa as applicable to summarised financial statements. The Society is a funeral assurance provider and the subsidiaries manufacture, distribute and sell funeralware and conduct funerals. The Group has a manufacturing plant in Bloemfontein and conducts business in South Africa. These summarised financial statements have been audited. The summarised financial statements do not include the complete accounting policies required in the annual financial statements and should be read in conjunction with the annual financial statements for the year ended 30 June 2022. There are a number of amendments, interpretations and improvements to standards that are not yet effective in 2022.