One of the major functions of an insurer is investment of its funds and with the ever growing fund size of investments, safeguarding and protection of the same has acquired enormous significance. Insurance Regulatory and Development Authority (IRDA), the regulator, has put in place a tight framework for regulating this important function of insurers. The IRDA has devised two tier system for effective management and control of investment functions of insurers whereby the investment department of insurance companies manage investments and an independent Chartered Accountant firm (subject to quantum of fund size) is engaged to conduct the internal / concurrent audit of the same to ensure compliance with the Investment Regulations.
As per the latest amended investment regulations notified vide IRDA (Investment) (5th Amendment) Regulations, 2013, the IRDA has mandated the insurers having Assets Under Management (AUM) of not more than Rs.1000 Crores to have its investment functions audited on a quarterly basis through independent Internal Audit (either through internal resources or through firms of Chartered Accountants) and insurer with AUM of over Rs. 1000 Crores to appoint an independent firm of Chartered Accountants as Concurrent Auditor to have its Investment transactions and related Systems audited on concurrent basis. It has further mandated that the internal / concurrent audit shall be conducted as per the Technical Guide on Internal/Concurrent Audit of Investment Functions of Insurance Companies issued by the ICAI. The Guide provides framework and guidance on the manner of conduct of internal/concurrent audit of investment functions of insurance companies, as mandated by the IRDA.
In the light of release of the IRDA (Investment) (5th Amendment) Regulations 2013, to help the members in providing value added service to the insurers and to comply with the amended investment regulations of IRDA, the Committee on Banking, Insurance & Pension (COBIP) has revised the Technical Guide on Internal / Concurrent Audit of Investment Functions of Insurance Companies, which was originally issued in 2009. The revised guide covers all the relevant areas in the internal / concurrent audit of investment functions as mandated by IRDA.