Reinsurance—P&C
COSO
Component
Cycle
Transaction
Process
Control
Objective
Control
Objective
Control
Type
(CAVR)
Control
Objective
Category
(C/FR/O)
Risk
Point of Focus
Point of
Focus
Control
Type
(CAVR)
Control
Activity
Reinsurance
Reinsurer
selection
The Company
formulates a
reinsurance
program to meet
business
objectives
including
capacity,
reduction of risk
exposure and
catastrophe
protection.
V
O
Management lacks the
experience to place its own
reinsurance cover, resulting
in the selection of
inappropriate reinsurers.
Reinsurers and reinsurance
intermediaries (including
renewals) are selected and
approved by a reinsurance
committee comprising
representatives from the
underwriting, claims,
actuarial, finance and legal
functions.
V
Control
Activity
Reinsurance
Reinsurer
selection
The Company
formulates a
reinsurance
program to meet
business
objectives
including
capacity,
reduction of risk
exposure and
catastrophe
protection.
V
O
Catastrophic events result in
a high frequency and
severity of claims which
undermines the Company’s
financial position.
The reinsurance program
includes a level of
catastrophe cover
commensurate with the
nature and distribution of
risks insured.
V
Control
Activity
Reinsurance
Reinsurer
selection
Reinsurance
needs for new
products are
evaluated and
programs are
V
O
The existing reinsurance
program does not
consistently address the
risks insured across all
product lines.
Reinsurance needs are
assessed for all new
products on a timely basis
based upon anticipated loss
ratios, anticipated claims
V
1
Reinsurance—P&C
established
timely.
development patterns and
cash flow forecasts.
Control
Activity
Reinsurance
Reinsurer
selection
Appropriate
reinsurer
selections
enhances the
Company’s
financial
position.
V
O
The Company’s financial
position is adversely
affected by ceding business
to reinsurers with poor
credit ratings
The Company assesses the
impact of using a particular
reinsurer on its own credit
rating, by monitoring the
assuming reinsurers’ credit
ratings and financial
performance.
V
Control
Activity
Reinsurance
Reinsurer
selection
Senior
management
monitors the
status of selected
reinsurers to
identify potential
issues.
V
O
Reinsurer selection or
developments expose entity
to unacceptable level of
credit risk
The reinsurance committee
meets regularly to assess
monitor the financial
security and solvency of
each reinsurer, and to
monitor the Company’s
credit risk exposure.
V
Control
Activity
Reinsurance
Reinsurer
selection
Deterioration in
the financial
security of
reinsures is
identified on a
timely basis.
V
O, FR
Deterioration in the
financial security of
reinsurers is not identified
on a timely basis.
The company identifies
reinsurers placed on credit
watch by major rating
agencies on a timely basis
and scrutinise amounts due
and payable accordingly.
V
Control
Activity
Reinsurance
Contract
Placement
An enforceable
contract exists
between parties
that effectively
transfers
insurance risk
from the cedent
to the assuming
company.
V
O, FR
Contracts do not exist to
support reinsurance ceded
Note: Generally the
reinsurance contract is not
signed by all parties until
many months after the
effective date. The
documentation to evidence
the binding agreement when
coverage is first arranged is
often minimal and records
the basics of the agreement.
The level of documentation
V
2
Reinsurance—P&C
increases to completeness at
the signing of the contract.
Reinsurance contracts and
binding authorities are
developed in accordance
with Company guidelines
and are authorized by senior
underwriting management.
Control
Activity
Reinsurance
Contract
Placement
The Company
records all
reinsurance
contracts entered
into.
C
FR
Incomplete record of
contractual rights and
obligations.
A complete register of
reinsurance contracts and
intermediaries with binding
authorities is maintained.
C
Control
Activity
Reinsurance
Contract
Placement
The Company
records all
reinsurance
contracts entered
into.
C
FR
Contract documentation
may be altered, damaged or
lost.
Reinsurance contracts are
stored in a secure location
and accessible only by
authorized personnel
V
Control
Activity
Reinsurance
Contract
Placement
Reinsurance
transactions are
based upon
current the
reinsurance
program.
V
FR
New business is
underwritten using outdated
or based upon outdated
contract terms or expired
contracts.
The approved reinsurance
program and updates are
communicated to all
underwriters and
intermediaries with binding
authority.
V
Control
Activity
Reinsurance
Contract
Placement
Reinsurance
transactions are
based upon
current the
reinsurance
program.
C, A
FR
Reinsurance transactions are
processed based upon
outdated contract terms or
expired contracts.
The policy administration
system, reinsurance register,
and commission register are
updated to reflect
reinsurance terms
immediately upon inception
of the contract.
C, A
3
Reinsurance—P&C
Control
Activity
Reinsurance
Contract
Placement
Reinsurance
contracts are
approved by
senior
management
V
O, FR
Contracts are amended
without proper scrutiny and
authorization.
Amendments to existing
contracts are approved by an
appropriate officer and the
policy administration
system and commission
register updated
accordingly.
V
Control
Activity
Reinsurance
Contract
Placement
Effective
segregation of
duties
R
FR
Contracts are placed for the
purpose of paying
fraudulent ceded premiums
to reinsurers’
Segregation of duties
between approval of
reinsurance and recording of
reinsurance transactions.
R
Contract
Placement
Reinsurance
Contract
Placement
The cedent owns
or has
appropriate
rights to
reinsurance
ceded assets and
incurs
reinsurance
ceded liabilities.
C, A, V
FR
Internal control weaknesses
at intermediaries result in
the misstatement of
reinsurance balances by the
Company.
Reinsurance contracts
contain a clause permitting
the inspection of
intermediaries
operations/records.
C, A, V
Contract
Placement
Reinsurance
Contract
Placement
The cedent owns
or has
appropriate
rights to
reinsurance
ceded assets and
incurs
reinsurance
ceded liabilities.
C, A, V
FR
The Company pays loss
expenses that should have
been settled by the
reinsurer.
Obligation for paying loss
adjustment expenses is
clearly defined as the
responsibility of either the
ceding or assuming
company.
C, A, V
Contract
Placement
Contract
Placement
Contract
Placement
Reinsurance
contracts
demonstrate
compliance with
V
C
Taxation liabilities arise
where reinsurance
transactions to affiliates are
deemed to be a means of
Transfer pricing analysis is
performed to ensure that
reinsurance ceded to
affiliates meets the
V
4
Reinsurance—P&C
transfer pricing
requirements.
extracting profits.
definition of an arms-length
transaction under transfer
pricing requirements.
Control
Activity
Reinsurance
Contract
Placement
Reinsurance
contracts comply
with regulatory
requirements.
V
C
Failure to comply with
regulatory requirements
results in regulatory action
Contract formation
incorporates applicable
domestic and overseas
licensing requirements.
V
Control
Activity
Reinsurance
Contract
Performance
Intermediaries
and reinsurers
fulfil their
contractual
obligations.
V
C
Changes to reinsurance
contract terms results in the
retention of inappropriate
insurance risks or increased
insurance liabilities.
Execution of the contract is
reviewed periodically to
ensure compliance with the
contractual terms and of the
agreement.
V
Control
Activity
Reinsurance
Contract
Performance
Sufficient data to
assess contract
performance is
gathered and
recorded on a
timely basis.
C, A, V
FR
Inaccurate assessment of
contract performance based
upon inaccurate or
incomplete data
QR reviews are performed
for each contract to ensure
that sufficient
documentation exists to
support recorded ceded
reinsurance transactions.
C, A, V
Control
Activity
Reinsurance
Contract
Performance
The Company
monitors the
performance of
individual
reinsurance
contracts.
V
FR
Contracts fail to properly
mitigate the insurance risk
as expected.
Financial performance of
the contract is compared
with anticipated results
(including profitability and
cash flows – see risk
transfer analysis section).
V
Control
Activity
Reinsurance
Contract
Performance
The Company
monitors the
performance of
intermediaries
placing
reinsurance
C, A, V
FR
The commission structure
encourages inaccurate or
fraudulent reporting of
transactions by
intermediaries.
Periodic controls reviews
are performed at reinsurers
and intermediaries that are
authorized to bind the
insurance company without
prior approval.
C, A, V
5
Reinsurance—P&C
business.
Control
Activity
Reinsurance
Contract
Performance
Management
monitors
changes to
existing contract
terms.
V
C
Unauthorized amendments
to existing contacts results
adversely impacts the
effectiveness of the overall
reinsurance program.
Changes to reinsurance
contracts are reviewed and
authorized by an appropriate
officer.
V
Control
Activity
Reinsurance
Contract
Performance
All amounts due
to from
reinsurers are
collected in
accordance with
contract terms.
C, A, V
FR
The Company fails to
recover reinsurance
recoverable balances
An arbitration process exists
to resolve disputed
reinsurance recoveries.
C, A, V
Control
Activity
Reinsurance
Contract
Performance
Reinstatements
are utilized to
provide cost
effective
reinsurance
cover.
A
FR
The Company pays
reinstatement premiums
where limits have not yet
been exceeded.
Reinstatement premiums are
reviewed and approved by
an appropriate official.
A
Control
Activity
Reinsurance
Risk Transfer
Analysis
Contracts which
pass the risk
transfer test,
cover future
insurable events
and are not
multiple-year
retrospectively
rated are
recognised under
the prospective
accounting
method.
V
FR
The Company has
significant intercompany
reinsurance agreements
which may not meet risk
transfer requirements
Note: the following “red
flags” are indicators of
potential risk transfer issues:
V
1.
2.
Contracts where
3.
6
Unusually high
premiums for value of
coverage obtained
Existence of contingent
and sliding scale
commission, profit
commissions,
retrospectively rated
premiums, per claim
deductibles
Double triggers (e.g.
Reinsurance—P&C
the assuming
reinsurer agrees
to reimburse a
ceding enterprise
for liabilities
incurred as a
result of past
insured events
are recognised
under the
retroactive
reinsurance
accounting
method.
loss warranties)
Accumulating
retentions over multiple
years
5. Experience
account/fund balance
6. Significant coverage
changes in multi-year
contract
7. Commutation and
termination provision
allowing reinsurer to
lock in payment pattern
8. Termination provisions
limiting ability to
cancel
9. Related party contracts
10. Multi-year
retrospectively rated
contracts
11. Retroactive reinsurance
contracts
12. Contracts that do not on
face value make
business sense.
4.
Contracts which
pass the risk
transfer test,
qualify as short
duration
contracts and for
which the
premium
expected to be
paid or received
are reasonably
estimable and
allocable in
proportion to the
reinsurance
protection
provided are
recognised as
multi-year
restrospectively
rated contracts.
A full risk transfer analysis
is prepared by underwriting
and actuarial personnel to
determine the appropriate
accounting treatment as
required by FAS 60, FAS
113 EITF 93-6 and SOP 987
7
Reinsurance—P&C
Reinsurance
contracts which
do not meet risk
transfer criteria
are recognised
under the deposit
accounting
method in
accordance with
SOP 98-7
Control
Activity
Reinsurance
Risk Transfer
Analysis
Management
maintains
sufficient
supporting
documentation to
support the risk
transfer
assessment.
V
O
Management is unable to
evidence compliance with
the risk transfer test if
challenged by third parties
The risk transfer analysis is
documented and reviewed
by an official with
appropriate underwriting
experience.
V
Control
Activity
Reinsurance
Risk Transfer
Analysis
Management
continues to
monitor risk
transfer
throughout the
life of the
contract.
V
O, FR
Changes in contract terms
mean that the contract no
longer passes the risk
transfer request and
necessitates different
accounting treatment.
Risk transfer is reassessed
by underwriting and
actuarial personnel when
there is any change or
adjustment to the
contractual terms of a
reinsurance contract. This
includes an assessment of
whether any change causes
all or a portion of the
contract to be retroactive.
V
Control
Activity
Reinsurance
Transactions
Recording
All premium and
claims
transactions are
assessed for
C, A, V
FR
Ceded reinsurance assets
and liabilities do not reflect
all applicable original
events.
The reinsurance system is
updated to reflect the ceded
portion of premiums written
and claims recorded in the
C, A, V
8
Reinsurance—P&C
reinsurance, and
accounted for in
accordance with
reinsurance
contract terms.
underlying policy and
claims administration
systems.
Control
Activity
Reinsurance
Transactions
Recording
All ceded
reinsurance
transactions are
accurately
recorded in the
policy, claims
and reinsurance
and actuarial
administration
systems.
C, A
FR
Inaccurate recording of
policy data due to
incorrect/invalid data entry
Rejected reinsurance data is
isolated, analysed and
corrected on a timely basis
through programmed
controls, batch headers and
suspense accounts.
Management reviews
resulting exception reports.
C, A
Control
Activity
Reinsurance
Transactions
Recording
All ceded
reinsurance
transactions are
accurately
recorded in the
policy, claims
and reinsurance
and actuarial
administration
systems.
A, V
FR
The policy, claims and
reinsurance administration
systems overstate ceded
premiums and reinsurance
recoverables.
System checks are in
operation to prevent
duplicate processing
reinsurance transactions
A, V
Control
Activity
Reinsurance
Transactions
Recording
All transactions
are recorded on a
timely basis.
C, A
FR
Processing backlogs exist
and are not cleared on a
timely basis
An appropriate level of
review is in place to ensure
that reinsurance data is
entered on a timely basis
and any backlogs addressed.
C, A
Control
Reinsurance
Transactions
Facultative
C, A
FR
Ceded premiums and claims
Programmed systems
C, A
9
Reinsurance—P&C
Activity
Recording
reinsurance is
clearly
identifiable from
Treaty
reinsurance, and
applicable
transactions
recorded in
accordance with
the appropriate
contract terms.
are inaccurately calculated.
controls separately identify
treaty and facultative
reinsurance.
Control
Activity
Reinsurance
Transactions
Recording
The unearned
premium reserve
accurately
reflects ceded
reinsurance
transactions.
A
FR
Incorrect amounts of
unearned premiums is
recorded in the financial
ledger.
The calculation of ceded
earned/unearned premium is
performed by the
reinsurance systems and
reviewed by an appropriate
official.
A
Control
Activity
Reinsurance
Transactions
Recording
Management to
ensure
completeness
and accuracy of
data input.
A, V
FR
Absence of effective
monitoring controls by
management.
Management information
critically analyses activity
by contract and individual
reinsurer: including current
and historical ceded
premiums and claims, loss
and combined ratios, ceded
unpaid case reserves and
IBNR, the relationship
between unearned to inforce ceded premium, profit
commissions, contract
pricing and cashflows. MI is
periodically reviewed by an
appropriate official.
A, V
Control
Activity
Reinsurance
Transactions
Recording
Reinsurance
transactions are
C, A, V
FR
Inaccurate data input results
in the misclassification of
The financial subledgers are
reconciled to the general
C, A, V
10
Reinsurance—P&C
accurately
reflected and
classified in the
financial ledgers.
financial records
ledger. Reconciliations are
reviewed and approved by
financial management.
Control
Activity
Reinsurance
Transactions
Recording
Ceded
reinsurance
transactions are
correctly
calculated in
accordance with
contract terms.
V
FR
Invalid or authorized
reinsurance transactions are
recorded in the Company’s
records.
Total reinsurance ceded
assets and liabilities are
reconciled to underlying
individual reinsurers’
records on a timely basis
and the reconciliation
reviewed by an appropriate
official.
V
Control
Activity
Reinsurance
Transactions
Recording
Reinsurance
amounts are
accurately
computed in
accordance with
contract terms.
A
FR
Ceded reinsurance
calculations are performed
incorrectly.
Ceded claims calculations
are reviewed by an
appropriate official and
authorized by an appropriate
official to ensure
compliance with the terms
of the contract
A
Control
Activity
Reinsurance
Transactions
Recording
Reinsurance
amounts are
accurately
computed in
accordance with
contract terms.
A
FR
Ceded reinsurance
calculations are performed
incorrectly.
Ceded premium calculations
(including reinstatement
premiums and contingent
commissions) are reviewed
by an appropriate official.
A
Control
Activity
Reinsurance
Transactions
Recording
Deposit
premiums are
paid to the
reinsurers as they
fall due.
A
FR
Incorrect amounts are paid
to reinsurers on a periodic
basis, adversely impacting
the company’s cashflow and
working capital
requirements.
The calculation of deposit
premiums is reviewed by an
appropriate official.
A
Control
Reinsurance
Transactions
Prevention or
C, A
FR
The financial ledger does
Ceded premiums and claims
C, A
11
Reinsurance—P&C
Activity
Recording
detection of
incorrect entries
to premium and
claims systems.
not accurately reflect
reinsurance activity.
are reconciled to the policy
and claims administration
systems, actuarial system,
commission register and the
reinsurance subledgers
Control
Activity
Reinsurance
Transaction
Recording
The company
maintains
appropriate
funds to reduce
the statutory
provision for
unauthorized
reinsurance.
A
R
Misstatement of reinsurance
liabilities
The calculation of funds
withheld is reviewed by an
appropriate official.
A
Control
Activity
Reinsurance
Transactions
Recording
Only valid
transactions are
recorded in the
underlying
records.
A
FR
Incorrect amounts of gross
and net written premium
recorded in the financial
statements.
Suspense accounts are
reconciled and reviewed by
an appropriate official for
unusual or aged items.
A
Control
Activity
Reinsurance
Transactions
Recording
Effective
segregation of
duties.
R
FR
Fraudulent data entry results
in the misappropriation of
cash receipts.
Segregation of duties
between those maintaining
reinsurance premium and
loss recoveries and those
responsible for processing
cash receipts and payments.
R
Control
Activity
Reinsurance
Transaction
Recording
Reinsurance
balances and
transactions are
correctly stated
in the reporting
currency.
A
FR
Misstatement of reinsurance
receivables, payables and
activity.
Translation of foreign
currency written premiums
is calculated using
prevailing exchange rates at
the date of policy inception.
A
Control
Activity
Reinsurance
Transaction
Recording
Tax information
derived from
CA
FR
Erroneous data may be used
in tax computations and
Programmed subledger
coding facilitates the
C, A
12
Reinsurance—P&C
premium
activities is
accurately and
promptly
reported.
result in overpayments or
underpayments of taxes.
automated classification,
summarization, and retrieval
of required tax information.
Control
Activity
Reinsurance
Transaction
Recording
Tax information
derived from
premium
activities is
accurately and
promptly
reported.
C, A
FR
Erroneous data may be used
in tax computations and
result in overpayments or
underpayments of taxes.
Review of major
transactions or major classes
of transactions by
individuals who are
knowledgeable about tax
requirements.
C, A
Control
Activity
Reinsurance
Transaction
Recording
Tax information
derived from
premium
activities is
accurately and
promptly
reported.
CA
FR
Taxes are incorrectly
calculated.
Documented procedures for
developing, summarizing,
and reporting required tax
information.
C, A
Control
Activity
Reinsurance
Transaction
Recording
Relevant
disclosure data is
gathered
completely,
accurately and
on a timely basis.
C, A, V
FR
Required GAAP/ MD&A/
10-K disclosures are
incomplete or inaccurate for
presentation in the financial
statements
Recorded transactions
capture and aggregate
required account disclosures
including:
- ceded written and
earned premiums
- ceded claims incurred
- gross and net unpaid
losses and loss
expenses (current and
prior year components)
- A&E exposures
- reinsurance
recoverables and
associated bad debt
C, A, V
13
Reinsurance—P&C
-
-
allowance
funds withheld
letters of credit
reinsurance balances
receivable/payable
analysis of credit
exposure by reinsurer
appropriate segmental
and geographical
analysis
associated cash flows
material legal
proceedings
Control
Activity
Reinsurance
Billings and
collections
Reinsurance
amounts are
accurately
computed in
accordance with
contract terms.
C, A
FR
Failure to bill and collect
amounts due on a timely
basis.
Claims are received by the
claims function are
aggregated and passed to the
reinsurance function for the
purposes of assessing
reinsurance recoveries on
surplus or excess
reinsurance contracts.
C, A
Control
Activity
Reinsurance
Billings and
collections
Reinsurance
amounts are
accurately
computed in
accordance with
contract terms.
A
FR
Ceded reinsurance
calculations are performed
incorrectly.
Ceded claims calculations
are reviewed by an
appropriate official and
authorized by an appropriate
official to ensure
compliance with the terms
of the contract
A
Control
Activity
Reinsurance
Billings and
collections
Reinsurance
recoveries are
appropriately
authorized.
A, V
FR
Unauthorized reinsurance
billings are issued to
reinsurers.
Individually significant
reinsurer and intermediary
billings are reviewed and
authorized by an appropriate
official prior to issuance.
A, V
14
Reinsurance—P&C
Control
Activity
Reinsurance
Billings and
collections
Amounts billed
accurately reflect
adjustments
permitted under
the terms of the
reinsurance
contract.
Effective
segregation of
duties.
A, V
FR
Unauthorized reinsurance
billings are issued to
reinsurers.
Billings are adjusted to
reflect retrospective
adjustments and contingent
commissions. All such
adjustments are reviewed by
an appropriate official.
A, V
Control
Activity
Reinsurance
Billings and
collections
R
FR
Fraudulent reinsurance
transactions are recorded for
the purpose of
misappropriating assets.
Segregation of duties exists
between cash receipts
processing and recording
reinsurance recoverables
R
Control
Activity
Reinsurance
Billings and
collections
Reinsurance
recoverables are
identified on a
timely basis and
communicated to
intermediaries
and reinsurers.
C, A, V
FR
Failure to identify
reinsurance recoverable
balances receivable on a
timely basis. Delays in
collecting receivables
Statements are issued to
reinsurers on a timely basis
detailing ceded premiums,
claims, commissions, and
applicable adjustments.
C, A, V
Control
Activity
Reinsurance
Allowance for
Uncollectible
Reinsurance
Recoveries
recorded under
reinsurance
contracts
represent
collectible assets
V
FR
Reinsurance recoverables
represent collectible assets
after making allowance for
doubtful debts.
Reinsurance personnel
responsible for placing
reinsurance business liase
with credit controllers to
monitor collectability of
reinsurance recoverables.
V
Control
Activity
Reinsurance
Allowance for
Uncollectible
Reinsurance
Management
monitors the
recoverability of
reinsurance
assets
C, A
FR
Unidentified delinquent
accounts exist without any
allowance for doubtful debts
being established.
Aging analysis of
reinsurance recoverables is
performed for each reinsurer
to identify delinquent
accounts.
C, A
Control
Activity
Reinsurance
Allowance for
Uncollectible
Reinsurance
Consistent
methodology is
applied to
determine the
C, A
FR
Bad debt allowance against
reinsurance recoverables
reflects the credit ratings of
individual reinsurers (see
The reinsurance committee
meets regularly to assess
monitor the financial
security and solvency of
C, A
15
Reinsurance—P&C
allowance for
bad debts on
reinsurance
recoverables.
Reinsurer Selection).
each reinsurer, and to
monitor the Company’s
credit risk exposure.
Control
Activity
Reinsurance
Allowance for
Uncollectible
Reinsurance
Management
approval is
required to writeoff reinsurance
recoverable
balances.
R
FR
Assets are written-off
without pursuing recovery
with sufficient rigour.
Write-offs of amounts due
from reinsurers and
intermediaries are approved
by authorized personnel
only and supported by
documentary evidence.
R
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
The financial
statements
accurately reflect
the amount of
premiums due
expected to be
recoverable.
R
FR
Unauthorized adjustments
are made to the financial
ledger.
Access to ledger journal
entries is restricted to
appropriate finance
personal.
R
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Effective
segregation of
duties
R
FR
Unauthorized adjustments
are made to the financial
ledger
Segregation of duties
between recording of
financial transactions and
processing of receipts.
R
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Polices and
procedures exist
for processing
journal entries.
A, V
FR
Incorrect/ inconsistent
treatment of manual
adjustments between
subledgers.
A chart of accounts is
maintained and updated on a
timely basis, establishing
procedures and account
mappings for processing
journal entries to subledgers
A, V
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Subledger
journal entries
represent valid
adjustments to
the Company’s
V
FR
Incorrect or fraudulent
journal entries are recorded
All journal vouchers are
approved by management
and attached to supporting
documentation.
V
16
Reinsurance—P&C
financial records.
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Ceded premiums
are only paid in
respect of inforce policies
written.
C, V
FR
Reinsurance premiums
continue to be paid in
respect of cancelled
policies.
Ceded premiums payments
are cancelled once the direct
policy is cancelled.
C, V
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Prevention or
detection of
incorrect entries
to reinsurance
data.
C, A
FR
The financial subledgers do
not accurately reflect
current policy data,
reinsurance terms and
billings.
The financial subledgers are
reconciled to the underlying
policy administration,
actuarial and reinsurance
systems. Reconciliations are
reviewed and approved by
financial management.
C, A
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Subledgers are
reconciled to the
policy and
claims
administration
systems.
V
FR
Unreconciled suspense
accounts are not cleared on
a timely basis.
Suspense accounts are
reconciled and reviewed by
an appropriate official to
identify and clear unusual or
aged balances.
C, A
Control
Activity
Reinsurance
Adjustments
and Ledger
Maintenance
Subledger
journal entries
are recorded on a
timely basiis.
A
FR
Ledger maintenance
activities are recorded in the
correct financial period.
Manual adjustments are
reviewed by an appropriate
official to ensure they are
accurately recorded in the
financial period.
A
17