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CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part IV)

Bharat Shield General Insurance Ltd. is a public company already subject to audit under the Companies Act, 2013. Its compliance officer asks whether a separate annual audit of its revenue account is needed under section 12 of the Insurance Act, 1938. What is the correct position?

No separate audit is required. Section 12 of the Insurance Act requires annual audit of an insurer's accounts only unless they are already subject to audit under the Companies Act, 2013. Since Bharat Shield is audited under that Act, the requirement is satisfied by the company audit.

  1. AA separate audit is needed in every case, in addition to the company audit
  2. BAudit under section 12 is needed only if the insurer has a life business
  3. CSection 12 audit is needed only when the Authority specifically directs it
  4. DNo separate audit is needed, because section 12 applies unless the accounts are already subject to audit under the Companies Act, 2013Correct

Explanation

Section 12 requires annual audit of the balance sheet, profit and loss account, revenue account and appropriation account of every insurer, unless they are subject to audit under the Companies Act, 2013. Bharat Shield is already so audited, so no separate section 12 audit arises. The auditor has the powers and duties of a company auditor under section 147 of the Companies Act.

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