Mumbai: Insurance firms will have to undertake an investment-specific concurrent audit as mandated by the Insurance Regulatory and Development Authority, or Irda.
A concurrent audit is a systematic and timely examination of financial transactions on a regular basis to ensure accuracy and compliance with procedure and guidelines.
Currently, there is no uniformity in the audit process. Some companies have both internal and external auditors. Others do not have an internal auditor. This move will bring about a uniform audit process.
Experts say that a statutory audit, which is currently being used, only looks into financial transactions of a firm; they advocate a shift to the concurrent audit system, which is exhaustive and looks into the investments and risk management issues as well. It will also ensure that firms comply with Irda’s investment guidelines.
Irda member R. Kannan says a concurrent auditor will “ensure the availability of all risk management principles. Hence from risk management view point, this is an important step”. One firm cannot be a concurrent auditor of more than two companies.