INSURANCE ACCOUNTING AUDIT & REGULATIONS (NON-LIFE)

Background
With the opening up of the insurance industry the methods and techniques of Insurance Accounting and Audit along with Regulatory Norms have undergone revolutionary changes. Insurance management, as we know, is a critical process of fund management. It is a management of policyholders’ fund and shareholders’ funds for timely payment of claims to policyholders and payment of dividend to shareholders The efficiency of this fund management function lies in the efficiency of financial management based on statutory insurance accounting and audit and also observance of financial regulations. Financial accounting based on Indian Accounting Standards, Accounting regulations and the provisions of the Companies Act and the Insurance Act. The process, practice and techniques of financial management and insurance business are adopted with reference to the general principles and perspectives of financial management as well as to the above statutory and regulatory aspects. This Programme is designed to cover all above aspects under the broad heads of i) Insurance Accounting, ii) Audit and iii) Financial Regulations.

Insurance Accounting
There are several areas in insurance accounting and financial management both at the corporate level and operational level that need focused attention and critical review of the corporate management for their managerial decisions. Though the basic accounting principles and accounting standards are same for accounting of insurance business, there are certain intricacies and peculiarities in insurance transactions due to very nature of insurance business, that need particular formats of financial statements with particular set of guidelines for preparation of financial statements complying disclosure norms and principles as specified below.

Financial Regulations:
Insurance Regulatory issued a specific Regulation in this regard providing a separate set of guidelines of accounting general insurance companies. The Insurance Act 1938 and the IRDA Act 1999 that deal with insurance business in India provide the legal framework of insurance accounting in India over and above the principles and practice prescribed by Generally Accepted Accounting Principles (GAAP) and the various Accounting Standards (AS) issued by the Institute of Chartered Accountants of India and other international Financial Accounting Standards Board (FASB).IRDA(Preparation of Financial Statements & Auditor’s Report of Insurance Companies) Regulations, 2000 provide the Insurance Accounting and Financial Regulations

Audit & Financial Control:
Schedule ‘C’ of the above IRDA Regulations prescribe the matters to be specified in the Report of the Auditors on the Financial Statements.. In insurance business various types of audits such as Statutory Audit, C&AG Audit Regulatory Audit Special Audit and Investment Audit are carried out. Every audit has its own process, perspective and requirements. Statutory Audit is conducted as per the provisions Sec.224 to Sec. 233 of the Companies Act’1956 (as amended) for reporting the maters specified in the schedule C of the IRDA Regulation, 2000. C&AG Audit is conducted by an auditor appointed by or reappointed by the Controller and Auditor General of India under Sec.619 of the Companies Act for the Govt. Company as defined by Sec.617 of the Companies Act, 1956, Regulatory Audit is an audit, checking, examination and verification of books of accounts, investments of funds, margin of solvency etc per provisions of sec.14 of the IRDA Act, 1999. Special Audit is an audit conducted by a Chartered accountant or Company’s Auditor under the directives of the Central Govt. as per provisions of Sec.233A of the Companies (Amendment) Act 1960 in certain cases. The Programme is intended to cover all above aspects

Objectives:
§ Understanding of Accounting Framework

§ Preparations of Financial Statements and guidelines

§ Understanding the Financial Control and Analysis

§ Understanding the concept and application of solvency and liquidty

§ Understanding of the disclosures in Directors’ Reports

§ Understanding of Audit requirements

§ Understanding Corporate Governance

§ Understanding Accounting information for financial analysis.

§ Understanding Systems and Structure of Corporate Taxation in Insurance

§ Understanding IT implementation in Financial Accounting, Audit and Control

§ Understanding Financial Planning & Control Systems
Contents :

§ Recognition of Revenue

§ Financial Accounting Standard

§ Accounting Principles.. Historical Cost Principle, Revenue Recognition Principles, The Matching Principles, Full Disclosure Principles etc

§ Regulatory Prescription on Principles of Accounting

§ Preparation of Financial Statements

§ Financial Statement Analysis

§ Working Capital Management

§ Ascertainment of liability for policyholders,

§ Asset Liability Management

§ Directors’ Report, Balance Sheet Income Statement, Cash Flow Statement,

§ Auditors’ Report and Corporate Governance Report etc.

§ Accounting for Insurance Business with reference to IRDA regulations

§ Familiarization of Specific & relevant Accounting Standards promulgated by the Institute of Chartered Accountants of India

§ Financial Report Analysis and Solvency Measures