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Effectiveness Testing of Internal Controls

The Insurance Authority recently released Circular No. (21) of 2019 regarding 2020 Reporting Requirements for All Insurance Companies Operating in the UAE.

This Circular requires external auditors to issue a separate opinion on the effectiveness of internal controls over financial reporting at all insurance companies. Which the Circular makes no reference to a specific internal control framework, it is widely expected that the COSO framework will be adopted as best practice.

In order to issue such an opinion, external auditors will need to carry out extensive testing of the internal control framework in place at insurance companies across areas such as governance, business cycle controls and IT general controls i.e. effectively the majority of controls and processes in place at insurance companies.