Financial Statements of an Insurance Undertaking

The aim of this chapter is to explain the implementation of European directives concerning the representation of accounting records in the insurance industry. The legislator, taking into account the normative experiences of the single countries, has tried to reconcile opposing demands of the parties concerned with insurance financial statements. In the following paragraphs, the reader can learn the accounting principles. The Local Generally Accepted Accounting Principles (Local GAAPs) are defined. Then, the IAS/IFRS principles are illustrated. For easing in the comprehension, a comparison of the main Local GAAPs versus IAS/IFRS principles has been performed. The principles for drawing up financial statements are explained: principle of formal clarity and transparency, principle of continuity (or going concern), principle of prudence, principle of accrual, prevalence of substance over form, principle of materially, consistency principle. At the end, the components of the financial statements, in accordance with IAS 1, are described: statement of Financial Position, single Statement of Profit or Loss, statement of Other Comprehensive Income, statement of changes in equity for the period, statement of Cash Flows, explanatory notes containing a summary of accounting policies.