1. Significance of Auditor’s
  2. Role of Insurance Auditors in Insurance Audit
  3. Mandatory Committee of Auditor

Significance of Auditor’s

Every insurance underwriter shall represent Audit Committee as per Section 177 of the businesses Act, 2013. The committee ought to administer the money statements, money reportage, statement of money flow revelation processes each on an annual and quarterly basis. The president of the Audit Committee ought to be a freelance Director of the Board with accounting /finance /audit expertise and should be a controller or an individual with a robust money analysis background. The association of the chief operating officer within the Audit Committee ought to be restricted to occasions wherever the Audit Committee needs eliciting any specific data regarding audit findings. PRN underneath Section 177 of the businesses Act, 2013, the Audit Committee shall comprise of a minimum of 3 administrators, the majority of whom shall be freelance administrators. The Audit Committee can administer the economical functioning of the inner audit department and review its reports. The Committee can in addition monitor the progress created in the rectification of irregularities and changes in processes where deficiencies have been returned to note. The Audit Committee shall have the oversight on the procedures and processes established to appear when the problems about maintenance of books of account, administration procedures, transactions, and different matters have an impact on the money position of the insurance underwriter, whether or not raised by the auditors or by the other person. The Audit Committee shall seek advice from the statutory auditors before the audit commences, concerning the character and scope of audit additionally as have post-audit discussions to deal with areas of concern.

Role of Insurance Auditors in Insurance Audit

  • The Central Branch Auditors of a non-depository financial institution are appointed at the Annual General Meeting of the corporate.
  • Before creating the appointment an arrangement from the bourgeois and Auditor General should be received.
  • The insurers as per the rules of the Insurance Act, 1938, and therefore the firms Act, 2013 should fit the provisions with relevancy to the appointment of auditors.
  • As per the advice of the Audit Committee, the board appoints the statutory auditors, subject to the shareholder’s approval at the final meeting of the Indian non-depository financial institution.
  • The appointment of branch auditors is formed to conduct the audit of the divisions having equivalent rights and obligations as per the statute. The branch auditors submit their reports back to the statutory auditors.
  • However, at the division level, the branch auditors certify the balance and incorporate the money statements of the branches underneath the divisions.
  • The insurance underwriter can’t get rid of the statutory auditor while not taking the approval of the authority.
  • An audit firm cannot audit quite 3 insurers (Life insurance or insurance or Reinsurer or Non-Life Insurance) at a time.
  • They created an arrangement that will be cancelled if it’s found that the appointment of auditors by the insurers isn’t as per the projected pointers.

Mandatory Committee of Auditor

Investments: The auditor ought to confine mind the subsequent provisions associated with Investments of the Insurance Act, 1938 whereas examining the investments-of insurance company-

  1. Non-depository financial institution will solely invest in approved securities. However, it will invest otherwise than in approved securities if the subsequent conditions are happy.
    1. Such investments shouldn’t exceed twenty-fifth of the entire investments; and
    1. Such investments are created with the consent of the board of administrators.
  2. Insurance underwriter shouldn’t invest in shares or debentures of insurance or fund in far more than least of the following:
    1. 100 percent of its total assets;
    1. Two of the investee’s signed share capital or debentures.
  3. Insurance underwriter company shouldn’t invest in shares or debentures of an organization aside from insurance or fund in far more than least of the subsequent
    1. 100 percent of its total assets;
    1. 100 percent of the investee’s signed share capital or debentures.
  4. Non-depository financial institution cannot invest in shares and debentures of a personal company.
  5. The insurance firms cannot invest the funds of their policyholders outside India.

Money and Bank Balances

  • Bank reconciliation statements shall be ready.
  • The auditor ought to get confirmation of Bank Balances for all operative and down accounts.
  • The auditor ought to physically verify Term Deposit Receipts issued by bankers. usually, all money at year finish deposited as a term deposit with the bank
  • The auditor ought to verify the deposits and withdrawals transactions randomly and check whether or not the Account is operated by approved persons solely.
  • Just in case of funds, in -transit, he ought to verify that an equivalent are properly mirrored in a very reconciliation statement.

Outstanding Premium and Agents’ Balance

The audit procedures, which can be followed with regards to the agent’s balance, are as follows:

  • Verify whether or not the agent’s balances and outstanding balances in the outstanding premium account are listed, analyzed, and reconciled for the needs of the audit.
  • Verify whether or not recoveries of enormous outstanding are created in post audit amount.
  • Verify whether or not there are unspecified outstanding debit or credit balances as at the yearend that needs adjustment. A written clarification could also be obtained from the management is to their nature.
  • Verify that agent’s balances don’t embody employees’ balances and balances of different insurance firms.
  • Verify that no credit of commission is given to agents for businesses directly procured by it.