Page 242 - DCOM509_ADVANCED_AUDITING

Unit 12: Special Features of Audit

12.7 Keywords Notes

Audit: An unbiased examination and evaluation of the financial statements of an organization.
Banking: Banking means accepting for the purpose of lending or investment of deposits of
money from public repayable on demand or otherwise and withdraw able by cheque, drafts
order or otherwise (section 5(i)(b)).
Banking Company: Banking company means any company which transacts the business of
banking (section 5(i)(c)).
Compliance Audit: Audit undertaken to confirm whether a firm is following the terms of an
agreement (such as a bond indenture), or the rules and regulations applicable to an activity or
practice prescribed by an external agency or authority.
Fiscal Accountability: Maintaining the documentation necessary to support the financial
auditability of an item throughout its life cycle.

Insurance Premium: An insurance premium is the amount of money charged by a company for
active coverage. The sum a person pays in premiums, also referred to as the rate, is determined
by several factors, including age, health, and the area a person lives in.
Insurance Regulatory & Development Authority: Insurance Regulatory & Development
Authority, a body constituted under the Ministry of Finance to deal with licensing, regulating
and monitoring all activities relating to the insurers, brokers, agents, corporate agents and the
TPA's.
Managerial Accountability: It refers to a system of supervisory control, peer reviews and
reporting requirements, the agents being accountable to principals.
Mutual Benefit Financial Company: A company structure in which the company's owners are
also its clients.

Non-Performing Assets: A debt obligation where the borrower has not paid any previously
agreed upon interest and principal repayments to the designated lender for an extended period
of time.

Non-Banking Financial Companies: NBFCs are the heterogeneous group of institutions (other
than commercial and co-operative banks) performing financial intermediation in a variety of
ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc.
12.8 Review Questions

1. Write short note on “Unexpired Risks Reserve”.
2. Write a short note on Comprehensive Audit of Public Enterprises.
3. The audit of accounts of banks is carried out in four stages. Mention and explain them.

4. Discuss in detail the audit procedure of NBFCs.
5. What are the special features of a co-operative audit?
6. State the procedure for verification of Agents’ Balances in the course of Audit of GIC.
7. Write short notes on (i) Co-insurance; (ii) Re-insurance; (iii) Management Expenses of
Insurance Companies; (iv) Valuation of Investments in GIC and (v) Solvency Margin.
8. What observations an auditor of a GIC is required to make in compliance of CAG directions
u/s 619(3) of the Companies Act, in respect of (i) System of financial control; and (ii)
Investments?

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