LEADING accountant and insurance consultant Moore Stephens says that properly qualified, independent internal audit teams could have a big role to play in carrying out governance reviews for the FSA and other regulators in the post-Solvency II environment - provided certain challenges can be met.
Moore Stephens insurance internal audit partner, Gary Oliver says, “Internal audit has a vital role to play in providing independent assurance that an organisation’s risk management, governance and internal control processes are operating effectively. Internal auditors deal with issues that are of fundamental importance to the survival and prosperity of any business. For example, at present, many internal audit functions are playing a key role in validating the progress of insurance firms towards Solvency II compliance. And they could have an even bigger role to play in the post-Solvency II environment, if certain challenges can be overcome.”
The FSA has been using skilled persons reports with much greater frequency in recent years. Such reports can be commissioned in those cases where the FSA identifies a problem, or a potential problem, within a particular firm, and commissions an experienced professional to conduct a ground-up review. Gary Oliver says, “There is no reason why suitably resourced, independent, qualified and robust internal audit functions cannot perform such reviews. There are some provisos, however.
“At present, many internal audit functions lack the full range of required skills, not least the actuarial expertise, necessary to undertake such reviews. There is also a resource issue, with recruitment in the marketplace made difficult by a lack of available skilled practitioners. The talent pool becomes smaller still when firms are looking for people who can combine knowledge and experience of both internal audit and the insurance industry. In addition, independence of the function needs to be strong. But these are problems which can be overcome by using, for example, appropriate outsourced internal audit providers to either perform selected tasks or to undertake the internal audit function in its entirety.
“Internal audit will need access to a wide range of skills in order to carry out audit work in the post-Solvency II environment. It will also need to be able to demonstrate a robust, risk-based approach if the regulators are to place reliance on its work.”
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting networks, with 636 offices of independent member firms in 100 countries, employing 21,197 people and generating revenues in 2011 of $2.3 billion. www.moorestephens.co.uk
For more information:
Gary Oliver, Moore Stephens LLP
Tel: +44 (0)20 7334 9191
Labels: Insurance, internal audit, internal modesl, Moore Stephens, Solvency II