Insurance Companies Auditing
Auditing by itself is checking of organization’s financial activities. Attention is paid to all financial operations and reporting as correct and reliable keeping of accountability, reflection of all actions testifies about honesty and reliability of the organization as a business partner. Insurance companies as other organizations are the subject of checking. There are common practically for all organizations financial operations, which insurance companies accomplish, too. For example the leasing of buildings, payment of salary, business trips of the staff. The practice is wide here and the experience of checking such operations does not bring difficulties. But insurance auditing has its own special features and it is necessary to pay attention and be ready for them. The main difference of an insurance company when business is connected with insurance operations. Namely their checking gives specific character to insurance auditing. The methods of insurance auditing and preliminary plan of works are being elaborated for checking.
On the planning of checking several directions are usually distinguished:
1) the conclusion of insurance treaties and receiving insurance premiums,
2) insurance payments,
3) formation of insurance reserves and determining the quota of safety-first men in the reserve,
4) operations of reinsurance,
5) investments of insurance reserves.
The method of insurance auditing by itself is an investigation of possible models of risk in a concrete insurance company. Generalized risk models in combination with the elaboration of new determinations of risks, which can appear in connection with specialization of an insurer come into practice. Risk appreciation comes from minimal (1) to maximal (5) on the scale of 5. Insurance companies auditing is conducted by a specialist, who has necessary qualification of an expert and experience in the sphere of insurance. After the conducting of all stages of checking, auditor issues the conclusion. Risk appreciation must be supported by documents as on the revealing of serious breaches sanctions from the side of checking organs follow.