The impact of a fair value accounting application on takaful insurance surplus: Insights from Shikan insurance and reinsurance company limited in Sudan

Abstract

This study examines the impact of fair value accounting implementation on the quality of measuring, equitable distribution and enhanced disclosure of takaful insurance surplus within Shikan Takaful Insurance and Reinsurance Company Limited's financial statements. Data was collected using a two-part questionnaire and a descriptive analysis technique: one gathering personal data about respondents and the other exploring study themes across four dimensions to test hypotheses. The questionnaire was distributed to a random sample of 60 corporate employees and 54 individuals responded, reflecting a 90% response rate. Data analysis used the Statistical Package for Social Sciences (SPSS). Three hypotheses were tested: (1) a positive relationship between fair value accounting and the accuracy of takaful insurance surplus measurement. (2) A positive relationship between fair value accounting and the equitable distribution of takaful insurance surplus. (3) A positive correlation between fair value accounting and enhanced disclosure of takaful insurance surplus. Results demonstrate a positive influence of fair value accounting on surplus measurement quality, equitable distribution and improved disclosure in company financial statements. The study recommends the crucial adoption of fair value accounting practices in insurance and reinsurance companies emphasizing the necessity of maintaining commitment to fair value accounting. Additionally, promoting full disclosure of takaful insurance surplus in financial statements is highlighted as a valuable tool for attracting new policyholders.