Exploring the Effect of International Financial Reporting Standard (IFRS17) Adoption on the Quality of Financial Reports: A Case of Insurance Companies in Zambia

The introduction and the adoption of IFRS 17 signify a major shift in how insurance contracts are accounted for, making a significant departure from the preceding standard IFRS 4. While this transition aims to improve financial reporting quality, challenges such as inconsistent implementation, lack of expertise and systems limitations have hindered effective adoption. The explores the effect of IFRS adoption on quality financial reporting. Specifically, examining its effect on faithful presentation, relevance and comparability on the quality of financial reporting. Additionally, it identifies benefits and gaps in the adoption process. The study adopted an interpretivist philosophy and a qualitative method approach utilising an exploratory research design. Semi-structured interviews were conducted to collect data from accountants and auditors in the insurance industry who were purposively selected from the population. The data was analysed through thematic content analysis using NVivo version 15. The findings revealed that adoption of IFRS17 significantly improves quality of financial statements thereby enhancing user experience. Notably, the standard has introduced more detailed disclosures about nature and timing of cashflows, risk adjustments. Furthermore, profits recognised are matched with the service delivered through contractual service margins (CSM). The study concluded that the adoption of IFRS17 improves faithful presentation, relevance and comparability which are some of characteristics of quality financial reporting. Furthermore, the study found that there are many benefits associated with the adoption of IFRS 17. The study also revealed significant gaps that impede the effective adoption of the standard, such as lack of data management systems, inadequate actuarial models and lack of adequate skills among implementers. It is recommended that insurance companies adopt the standard in a more effective manner to optimise the benefits that the standard brings to the insurance sector and to different users of financial statements. Additionally, insurance companies must consider, comprehensive training programs for finance, accounting, and actuarial staff to build expertise in IFRS 17 requirements, ensuring accurate implementation and compliance. Additionally, they should modernize systems and establish robust data governance frameworks to handle the complex data and reporting requirements of IFRS 17. Further studies using either a quantitative or mixed-method approach especially on how the adoption of IFRS 17 impacts earnings management are recommended.