Auditing and insurance

Auditing

• Audit: independent examination of financial information to express an opinion. Objectives — true and fair view, not a guarantee against fraud (though SA-240 requires professional skepticism).
• Types: statutory, internal, concurrent, cost, tax, secretarial, forensic, management, performance (CAG).
• Vouching: examining vouchers to establish authenticity of transactions. Verification: confirming existence, ownership, valuation of assets/liabilities.
• Internal control vs internal check vs internal audit. Risk-based audit: inherent, control, detection risk.
• Company auditor: appointed by members (CA, 2013 s.139); rotation; report to members; CARO. Disqualifications s.141.
• CAG audit of government companies and EPFO as a public institution is a useful APFC link.

Insurance

• Principles: utmost good faith (uberrimae fidei), insurable interest, indemnity (not life), subrogation, contribution, causa proxima, loss minimisation.
• Life vs general. Life: term, whole life, endowment, ULIP, money-back, annuity. General: fire, marine, motor, health, crop, liability.
• IRDAI regulates. Insurance Act 1938; IRDA Act 1999. FDI cap in insurance has been revised (check latest — 74% in insurers was a recent regime; 100% proposals appear in current affairs).
• Social security link: PMJJBY, PMSBY, PMFBY (crop), ESIC medical, EDLI (life cover on EPF membership).
• Reinsurance: insurer insures part of risk with another insurer. GIC Re is Indian reinsurer.