Group 8 Audit Plan of Insurance Company Manulife
Group 8 Audit Plan of Insurance Company Manulife
Audit Plan of
MANULIFE PHILIPPINES
Prepared by:
De Vera, Kyle C.
Evangelista, Cristalyn B.
Gabriel, Rosemarie C.
Parlan, Andrea Maey M.
Suelto, Joanne V.
Submitted to:
Prof. Sande Amor
June 2021
Background
Audit Criteria
The Insurance auditors shall examine policy and liability procedures, risk valuation, tax
documents, and various other financial records of insurance. It is to ensure that proper insurance
rates and premiums are implemented and regulatory laws are being followed by insurance
companies.
Audit Scope
The Manulife objective of the risk assessment exercise is to focus annual activity on the
most important risks faced by the Company while providing appropriate audit coverage over other
areas over time. While still very much risk-based, Manulife does have a cycle element to its
coverage methodology whereby Manulife targets to cover key elements (i.e., auditable entities)
of highest risk units within two (2) years, medium risk over three (3) to five (5) years, and low-risk
units on a five (5) + year cycle (or alternate procedures). The key areas reviewed covered the
following:
1. Anti-Money Laundering and Anti-Terrorism Financing;
2. Insurance Premium;
2|Group 8: Manulife Philippines
j. Review and discuss with management and the independent auditor the Company’s
quarterly financial statements before the publication of earnings, including:
i. the results of the independent auditor’s review of the quarterly financial
statements; and
ii. any matters required to be communicated by the independent auditor
under applicable review standards.
k. Review and discuss with management and the independent auditor at least
annually significant financial reporting issues and judgments made in connection
with the preparation of the Company’s financial statements, including:
i. key areas of risk for material misstatement of the financial statements,
including critical accounting estimates or areas of measurement
uncertainty;
ii. whether the auditor considers estimates to be within an acceptable
range and the rationale for the final valuation decision and whether it is
consistent with industry practice;
iii. any significant changes in the Company’s selection or application of
accounting or actuarial principles;
iv. any major issues as to the adequacy of the Company’s internal controls;
v. any special steps adopted in light of material control deficiencies, if any;
and
vi. the role of any other audit firm.
l. Review and discuss with management and the independent auditor at least
annually report from the independent auditor on:
i. critical accounting policies and practices to be used;
ii. significant financial reporting issues, estimates, and judgments made in
connection with the preparation of the financial statements;
iii. alternative treatments of financial information within generally
accepted accounting principles that have been discussed with
management, ramifications of the use of such alternative disclosures
7|Group 8: Manulife Philippines
Balance Sheet
The essential points considered during an insurance audit in the Balance Sheet of
the Company are as follows:
1. Investments
The auditor must follow the following prescribed provisions with regards to
the investments. At the time of the inspections of the investments of the
insurance company:
a. An insurance company can invest only in approved securities. However, it
can also invest in securities other than approved securities if the following
conditions are satisfied:
♡ The investment made must not exceed 25% of the total investments
made.
♡ The investment must be made with the consent of the board of
directors.
b. An insurer must not invest in shares or debentures of an insurance or
investment company over least of the following:
♡ 10% of its total calculated assets
♡ 2% of the subscribed share capital or debentures of the investee.
c. An insurance company must not invest in the share or debentures of a
company other than an insurance or investment company above at least
the following:
♡ 10% of its total calculated assets.
♡ 10% of the subscribed share capital or debentures of the investee.
d. An insurance company is not allowed to invest in the shares and debentures
of a private company.
e. The insurance companies are not permitted to invest in funds of their
policyholders outside the country.
10 | G r o u p 8 : M a n u l i f e P h i l i p p i n e s
c. At least annually, review and approve the audit plan of the Internal Audit function
(including any significant changes to the audit plan) and, as part of this review,
satisfy itself that the audit plan is risk-based and addresses all the relevant activities
over a measurable cycle and that the work of the independent auditor and Internal
Audit is coordinated.
d. Review the periodic reports of the internal audit department on internal audit
activities, including audit findings, recommendations, and progress in meeting the
annual audit plan (including the impact of any resource limitations).
e. At least annually, review the performance evaluation and compensation of the
Chief Auditor, with the input of the Management Resources and Compensation
Committee, and assess the effectiveness of the Chief Auditor and the Internal Audit
function.
f. Recommend to the Board for approval the appointment and, when considered
appropriate, the dismissal of the Chief Auditor, who shall have direct access to the
Committee.
g. Review the results of periodic independent reviews and self-assessments of the
Internal Audit function’s conformance with the International Standards for the
Professional Practice of Internal Auditing and Code of Ethics, and action plans to
address any significant conformance issues.
h. Review reports from the Risk Committee respecting the Company’s processes for
assessing and managing risk.
Risk Management Oversight
a. Review reports from the Risk Committee respecting the Company’s processes for
assessing and managing risk.
b. The Committee will receive reports from the General Counsel as Chair of the
Disclosure Committee.
Oversight of Regulatory Compliance and Complaint Handling
a. Establish procedures for the receipt, retention, and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
14 | G r o u p 8 : M a n u l i f e P h i l i p p i n e s
c. The Committee shall meet with the Chief Auditor as necessary to review results of
testing of the effectiveness of the AML/ATF Program.
Review of Ethical Standards
a. Annual review of the Company’s Code of Business Conduct and Ethics.
b. Establish procedures to receive and process any request from the executive
officer(s) and Director(s) for waiver of the Company’s Code of Business Conduct
and Ethics.
c. Grant any waiver of the Company’s Code of Business Conduct and Ethics to
executive officer(s) and Director(s) as the Committee may in its sole discretion
deem appropriate and arrange for any such waiver to be promptly disclosed to the
shareholders in accordance with applicable laws or the rules of applicable securities
regulatory authorities.
d. Annual review and assessment of procedures established by the Board of Directors
to resolve conflicts of interest, including techniques for identification of potential
conflict situations.
e. Review and assessment of procedures established by the Board of Directors for
restricting the use of confidential information.
Summary of Important Accounts to be Audited
Following steps should be taken by the auditor while auditing the accounts of the insurance
company:
1. Internal Check Inspection
♡ Generally, checking the internal system is necessary and must go through the process
of examining the details thoroughly.
2. Verify the Premium
♡ The auditor vouches for the premium received if it is in accordance with the insurance
policy register and should check the total outstanding premium recorded in the books.
16 | G r o u p 8 : M a n u l i f e P h i l i p p i n e s
Sources:
TaxGuru Consultancy & Online Publication LLP. (n.d.). Key Points to the Insurance Audits.
TaxGuru. Retrieved June 1, 2021, from https://taxguru.in/chartered-
accountant/key-points-insurance-
audits.html#:%7E:text=The%20Insurance%20auditors%20shall%20examine,being
%20followed%20by%20insurance%20companies
ENTERSLICE FINTECH PRIVATE LIMITED. (n.d.). Insurance Audit for Insurance Companies –
Enterslice. https://enterslice.com/insurance-
audit?fbclid=IwAR1JdkpyaH45hZf6yHbOCFeft4yqH0d05Px9CXGtWx4FH3lcvYmb5x
jXxhI#:%7E:text=car%20insurance%20audit%3F-
,The%20insurance%20audit%20is%20a%20process%20typical%20to%20the%20in
surance,specific%20period%20coverage%20was%20provided
While auditing the accounts of insurance company which steps should be taken by the
auditor. (n.d.). Study Points. https://studypoints.blogspot.com/2011/10/while-
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