Scenario:
Insurers operate in a complex framework of laws and regulations which distinct in number of ways from that applicable in general to other commercial enterprises. In Mauritius the Insurers operate in the Insurance Act, and rules and guidelines of the regulator, the Financial Services Commission. As it is different from other commercial enterprises, there’re additional matters which an auditor needs to take in consideration in audit of insurance company.
Required:
Question 1: Illustrate out four additional matters that should be included in a letter of engagement between an auditor and an insurance company.
Question 2: The Insurance Act provides additional duties to an auditor who undertakes the audit of Insurance Company. Describe four of the additional duties as stated in the Act.
Question 3: When obtaining an understanding of insurance company and its environment, the auditor should consider whether the information obtained points out that fraud risk factors exist.
(i) Discuss and illustrate out the auditor’s and management’s responsibilities for prevention and detection of fraud.
(ii) Describe and illustrate out four (4) risk factors which are particularly relevant to Insurance business.