PRA Delays Effective Date for Work of Auditors on Matching Adjustment
PRA announced delay to the proposed effective date set out in paragraph 1.12 of the consultation paper CP11/20, which covers expectations and guidance related to auditors’ work on the matching adjustment under Solvency II. PRA confirmed that any finalized approach will not be effective for audits of the Solvency and Financial Condition Reports, in short SFCRs, with a December 31, 2020 reporting date. The delay to the proposed effective date takes into account feedback from the respondents to CP11/20, including in relation to the impact of COVID-19 shock. Through this communication, PRA intends to provide clarity and certainty for auditors and firms in relation to the audits of December year-end Solvency and Financial Condition Reports.
The proposals in CP11/20 include clarifications and enhanced transparency on the PRA expectations in respect of auditors’ work on the matching adjustment. CP11/20 also proposes several new expectations that relate to the communication by auditors on the subject of the matching adjustment. The proposals in CP11/20 would result in changes to the supervisory statement SS11/16 on the external audit of, and responsibilities of the governing body in relation to, the public disclosure requirement with reference to Solvency II. CP11/20 is relevant to UK Solvency II firms (including mutuals) that have approval to make use of the matching adjustment, especially those that are subject to an audit requirement in respect of their Solvency and Financial Condition Report. It is also relevant for the auditors of such organizations and the users of these Solvency and Financial Condition Reports. The consultation CP11/20 has now closed and PRA is considering the feedback it has received from respondents to the consultation, before finalizing the policy. Through its guidance, PRA aims to clarify the requirements and expectations for auditors that form a view on the matching adjustment as part of their audit of the Solvency and Financial Condition Report.
Related Links
Keywords: Europe, UK, Insurance, Solvency II, Matching Adjustment, CP11/20, SFCR, Implementation Timeline, External Audit, PRA
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
