INSURANCE AUDIT

Process of Appointment of Auditor

The Regional Office of Insurance company appoints the auditor. Some time, by Divisional Offices.

Qualification

The auditor need not be the Chartered Accountant.

Objective

To refund the unutilized premium to the insured or to pass the claim, in case of loss.

Tenure

Generally done within 90 days of the expiry of the policy period.

Focus Area

The main reason of doing the audit is to ensure that the insured has declared all his transactions to the Insurance Company.

Declaration of Transaction

Suppose ABC Ltd. has taken the policy of purchase & the coverage period is 2013-14. Now the Co. has to declare all the purchases made during the year 2013-14 to the Insurance Co.

Process

  1. Check the Audited Balance Sheet of the previous year & see whether the amount as per Audited B/S is tally with the software in which he is currently maintaining his Books of Account. If it is tallied, move to next process.
  2. See the total amount of purchases made (if it is the Purchase policy, if Sale then check Total Sales) during the period of policy.( Like 2013-14, in earlier example)
  3. The total purchase amount shouldn’t be more than the policy amount, if it is so the refund will be cancelled.
  4. If it is less then take the random invoices of purchase & check whether the invoice is declared to the Insurance Co. or not. (All invoices must be Declared)

 

Published by

Badal Gurung

Mr. Badal Gurung is the student of Chartered Accountant (Final) as well as IGNOU (B.Com).
He is currently working at Himanshu Kumar & Associates in Barakhamba, New Delhi, India.

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