Sunday, 16 October 2011

While auditing the accounts of insurance company which steps should be taken by the auditor

Following steps should be taken by the auditor while auditing the accounts of insurance company:

1. Internal Check Inspection :-
Generally internal check system insurance company is well organized that the bank. But auditor should examine the details of the internal check system.

2. Verify The Premium :-
Auditor should vouch the premium received with the insurance policy register. He should check the total outstanding premium from the books also.

3. Inspect The Claim Register :-
Auditor should compare the amount of claim with the claim register. He should also check the policies cancelled with the documentary evidences.

4. Cash Balances :-
Auditor should check the cash balances relating to the loans of the company. He should also verify the interest earned.

5. Examine The Final Accounts :-
Auditor should examine that the final activities of the insurance company have been prepared according the insurance act or not?

6. Verify The Payable Commission :-
Auditor should vouch the commission payable to agents. He should verify that this commission does not exceed the rates prescribed in the insurance act.

7. Examine The Investment :-
Auditor should examine all the investment made by the insurance company. Valuation of investment should also be checked.

8. Insurance Act 1938 Application :-
Auditor should also examine that all that prescribed legal requirements have been complied by the insurance company.

9. Checking Of Bonus :-
Auditor should vouch the bonus paid in the bonus register and agency register on closing balance.

10. Provision Of Depreciation :-
Auditor should also verify that sufficient depreciation is provided.

11. Examine Insurance Policies :-
Auditor should inspect the accounts re insured. He should also note the amount of reserves relating to the company loan.

12. Accrued Interest Checking :-
Auditor should verify the receipts interest, dividends and rent. He should of reserves relating to the company loans.

13. Allocation Of Surplus :-
Auditor should see that surplus is proper allocated to the shareholders policy holders.

14. Expenses Allocation :-
Auditor should examine that the management expenses are allocated correctly between the various accounts.

15. Deposits In State Bank :-
Auditor should also verify that the required amount is deposited in the state bank or not?

16. Balances Of Agency :-
Auditor should verify the balances of agency and branch to see that they are all recoverable.

17. Loans Against Policy :-
Auditor should verify those loans advanced to the policy holders against their policies. He should check the receipts and see that they are within the surrender value policy.


Fariha Naz 16 August 2017 at 10:11  

Very much informative .. thanks 😃

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