Explain the IRDA Preparation of Financial Accounts and Investment guidelines.

IRDA Guidelines for Preparation of Financial Accounts and Investment Guidelines  

In accordance to the section 114A of the Insurance Act, 1938, (4 of 1938), and in control of the Insurance Regulatory AndDevelopment Authority (Preparation Of Financial Statements And Auditor‟s Report Of Insurance Companies) Regulations, 2000, the Authority and the Insurance Advisory Committee, has made the following regulations:  

1) Related party transactions -All the related party transactions, as required by the Accounting Standard, have to be compulsorily disclosed by the insurers. 

2) Transfer of securities to policy holders’account - 

oAll the securities have to be transferred to the policyholdersAccount at either cost price or market price, according to whichever is lower.  

oWith respect to debt securities, the transfers are to be carried out at the net amortised cost.  

3) Bank reconciliation as on 31st March -Every insurer is needed to set down some internal guidelines on the reconciliation based on Generally Accepted Accounting Principles (GAAP), and constantly follow the same principles.  

4) Investments of policy holders and shareholders -All insurers have to maintain separate investment accounts for the shareholders and the policyholders as these are two separate business segments and the income or losses, accrued or capital, gains or losses on the investments is to be credited or debited to the respective Revenue Loss Account and Profit Account as the case may be. However, in case of practical difficulties, the consulting actuary and the investment head can evaluate issues, and constantly follow the same. The policy on this matter should be spelt out in the Significant Accounting policies.