Audit of insurance companies

Why Crowe Audex?

• During audit we test the internal control system, assess its effectiveness and offer set of measures to upgrade it, which helps to detect potential errors.
• Accounting system testing an insurance company can introduce some adjustments to the accounting reports in case of significant deviations from the current legislation.
• After the analysis of tax system and the fairness of tax base formation we give recommendations that will help to avoid tax sanctions.
• During the comprehensive analysis of financial activity we offer measures to increase the effectiveness and to use internal reserves for managerial decisions.
• Concluding the agreement for audit services, our client will be timely informed about the latest changes in the legislation of the Russian Federation and the documents of regulating authorities.

Insurance audit consists in independent examination of accounting records and express professional opinion about their accuracy.
During the audit and in compliance with the legislation we also run check-up concerning financial strength and responsibility of the insurer, organization of internal control system as it is stated in the current legislation in the sphere of regulation of insurance entities. 

During the audit we check general accounts and specific transactions,  peculiar only for insurance companies.
General questions are audit of recognition of transactions with fixed and material assets, compliance with labour legislation and payroll calculation, cash transactions, accounts receivable and accounts payable and some others. 
Specific questions that are to be considered during the insurance audit are predetermined by specific features of insurance transactions and special insurance legislation. 

Taking into consideration these special requirements to the insurer (such as amount of authorized capital, acquisition of license, prohibition on industrial, trade and intermediary and bank activities) first of all we examine existence of documents and their compliance to the legislation, which enables him to carry out insurance activities, such as:

• Articles of a bank
• State registration certificate
• License to carry out insurance activities

Set up compliance of the activity to the legislative requirements and compliance of performed insurance types to those authorized by the license.

In compliance with the current legislation all the insurers are obliged to conduct internal audit. Law specifies procedures for forming departments that will carry out internal audit, their rights and obligations and also rules of reporting to an insurance supervision body about carried out procedures.

In case of failure to provide information, an insurance supervision body has the right to direct an order obliging to eliminate violations. Non-fulfillment of this order invokes limitation or suspension of license.

In compliance with the current legislation on audit activities, we consider internal audit and its influence on the audit procedures that we carry out.

We pay great attention to the accuracy of formation, execution and accounting of insurance contracts and fairness of execution and accounting of insurance operations. 

Insurance payment is a substantial expenditure for the insurer. Auditor shall on a mandatory basis examine reasonability and timeliness of insurance payments and foundations for refusals in insurance payments.

Insurance specifics makes it necessary for the insurance organizations to have special reserves. In the course of audit we assess reasonability and correspondence of formed tax reserves to the assumed obligations, observance of terms of tax reserves placement.

In the course of the insurance audit we assess reasonability of expenditure included in prime cost of insurance services and accuracy of financial results.

Insurance legislation established special requirements for providing financial strength and responsibility of the insurer, organization of internal control system.

In the course of audit we conduct additional procedures concerning financial strength and responsibility of the insurer, organization of internal control system as it is stated in the current legislation in the sphere of regulation of insurance entities.

During the audit special attention will be given to compliance of to the requirements of the Federal law No 115 On combating money laundering and the financing of terrorism.