Case Study in Auditing Procedure Casualty (Automobile) Insurance Company.

In this article the examination of the financial statements of an automobile insurance company is discussed. The Company is carrying protection against the risks of auto liability, auto fire and theft, auto comprehensive, auto property damage, auto collision and miscellaneous auto. It is generally known that casualty insurance companies, especially those involved in auto risks, operating under State supervision, differ widely from those of commercial and industrial companies. State supervision includes the determination of the financial soundness of the insurance companies as well as competent management, which means that fair policy contracts can be sold and that all just claims arising out of them will be paid. The difference between insurance and commercial accounting is due not only to the type of statements used, but to how there records are kept. The records are usually handled on a cash basis and the financial statements prepared for the stockholders and policyholders based on accruals.