VI Are insurance companies required to establish an internal audit department and conduct annual internal audits? The duties of internal audit include auditing the accuracy and honesty of financial reporting, right? Through today’s article, let’s learn about this issue with Pham Consult!
Are insurance companies required to establish an internal audit department and conduct annual internal audits?
Pursuant to Article 85 of the Law on Insurance Business 2022, it is stipulated as follows:
Internal audit
1. Insurance enterprises and reinsurance enterprises must establish an internal audit department. Foreign branches in Vietnam can establish an internal audit department or use the internal audit department of a foreign non-life insurance enterprise or foreign reinsurance enterprise.
2. Annually, insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam must conduct internal audits according to the following contents:
a) Independently and objectively review and evaluate internal control and risk management activities;
b) Independent assessment of the appropriateness and compliance with regulations, internal policies, procedures and processes established in insurance enterprises, reinsurance enterprises and foreign branches in Vietnam ;
c) Make recommendations to correct and overcome errors, propose measures to improve and improve the effectiveness of systems, processes and regulations, contributing to ensuring insurance and reinsurance businesses Insurance and foreign branches in Vietnam operate safely, effectively and in accordance with the law.
3. Internal audit results of insurance enterprises and reinsurance enterprises must be promptly reported to the Board of Directors, Council of Members and to the Director or General Director of the enterprise.
Internal audit results of foreign branches in Vietnam must be promptly reported to foreign non-life insurance enterprises, foreign reinsurance enterprises and sent to the Director of foreign branches in Vietnam. .
4. The Minister of Finance shall detail this Article.
Thus, according to the above regulations, insurance enterprises are required to establish an internal audit department and conduct annual internal audits according to the following contents:
– Independently and objectively review and evaluate internal control and risk management activities;
– Independent assessment of the appropriateness and compliance with regulations, internal policies, procedures and processes established in insurance enterprises, reinsurance enterprises and foreign branches in Vietnam;
– Make recommendations to correct and overcome errors, propose measures to improve and improve the effectiveness of systems, processes, and regulations, contributing to ensuring insurance businesses and reinsurance businesses , foreign branches in Vietnam operate safely, effectively, and in accordance with the law.
The duties of internal audit in an insurance enterprise include auditing the accuracy and honesty of financial reporting, right?
Pursuant to Article 14 of Circular 70/2022/TT-BTC stipulating the duties of internal audit as follows:
Duties of internal audit
The duties of internal audit include:
1. Audit compliance with laws, internal processes and regulations of insurance enterprises, reinsurance enterprises, and foreign branches.
2. Audit the safety and efficiency in the management and use of capital, assets and resources of insurance enterprises, reinsurance enterprises and foreign branches.
3. Audit the accuracy, honesty, and effectiveness of the process of controlling financial information and preparing financial reports.
4. Audit the completeness, accuracy, and safety of information technology systems and professional software.
5. Audit other contents as requested by the Board of Directors, Board of Members of insurance enterprises, reinsurance enterprises, and parent companies of foreign branches.
Accordingly, the duties of internal audit in insurance enterprises include:
(1) Auditing compliance with laws, internal processes and regulations of insurance enterprises, reinsurance enterprises, and foreign branches.
(2) Auditing the safety and efficiency in the management and use of capital, assets and resources of insurance enterprises, reinsurance enterprises and foreign branches.
(3) Audit the accuracy, honesty, and effectiveness of the process of controlling financial information and preparing financial reports.
(4) Audit the completeness, accuracy, and safety of information technology systems and professional software.
(5) Audit other contents at the request of the Board of Directors, Board of Members of insurance enterprises, reinsurance enterprises, and parent companies of foreign branches.
Thus, the duties of internal audit in insurance enterprises include auditing the accuracy, honesty, and effectiveness of the financial information control process and the preparation of financial reports according to regulations.
What principles must internal audit in insurance enterprises comply with?
According to the provisions of Article 15 of Circular 70/2022/TT-BTC, internal audit in insurance enterprises must comply with the following principles:
(1) Independence:
– The organization and operation of the internal audit department must be independent of the departments of the first line of defense and the second line of defense;
– Internal audit workers are not allowed to simultaneously undertake work in the departments of the first line of defense and the second line of defense;
– Internal audit does not suffer any interference in the process of determining the scope and content of the audit, when evaluating and reporting audit results.
(2) Objectivity:
– Internal audit workers must ensure objectivity, honesty, fairness, and no bias;
– Records in the internal audit report must be carefully analyzed and based on collected data and information;
– The person doing the internal audit work is not allowed to audit the regulations, internal policies, procedures, and processes for which this person is primarily responsible for developing the regulations, internal policies, and procedures. that custom and process;
– The person doing the internal audit work is not allowed to participate in auditing activities or departments for which he or she is responsible for implementing activities or managing that department within 02 years from the date of the decision not to carry out operations or manage that department;
– Internal audit workers must promptly report to the Head of the Internal Audit Department issues that may affect objectivity when performing internal audit activities.
In case it is discovered that the person doing the internal audit work may not ensure the implementation of the principle of objectivity in internal audit activities, the Head of the internal audit department must report to the Board of Directors and the Board of Directors. co-members of insurance enterprises, reinsurance enterprises, parent companies of foreign branches to have appropriate solutions;
– The performance results of the Head of the Internal Audit Department must be regularly inspected by the Board of Directors, Board of Members of the insurance enterprise, reinsurance enterprise, and parent company of the foreign branch. , review, evaluate.
(3) People doing internal audit work must comply with the law and be responsible before the law for internal audit activities within the scope of assigned tasks.
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