The prepaid insurance premium is only a part of the insurance premium paid when the insurance policy is issued, and the total amount is calculated later.  Prepaid insurance premiums are insurance premiums paid by an enterprise to ensure a certain value from an insurance company to prevent accidental loss of property.
Prepaid insurance premiums are a typical account in a deferred asset program. Because almost every enterprise involves various types of insurance premiums, auditors often cannot avoid checking insurance premiums during auditing. Moreover, the audit of prepaid insurance premiums is representative of various deferred asset projects, and some issues such as the review of insurance premiums are not encountered in other deferred project audits. The prepaid premium audit is closely linked to the premium account. The amount in the premium account is the balance rolled over from the opening balance, premiums paid during the year, and the year-end balance. That is, the amount credited to the premium account comes from the credit of the prepaid premium account. However, since the payment of insurance premiums has been tested in the acquisition and payment cycle, the focus of this review is on prepaid insurance premiums.
The audit steps for the prepaid insurance program are as follows:
(1) Focus on the effective implementation of certain internal control systems:
1. Check the control of the occurrence and recording of insurance premiums, whether the payment of each premium is properly authorized and whether the normal payment procedures are followed.
2. Designate a special person to keep the insurance register, and regularly review the appropriateness of the insurance amount by an independent and competent staff member.
3. Check the control of insurance premium resale.
(2) Request a detailed schedule of prepaid insurance premiums, or prepare a copy by the auditors themselves. The review of this table does not focus on the balance at the beginning and end of the period, but mainly analyzes the number of prepaid insurance premiums and whether the premium payment is reasonable. The main tasks are:
1. Compare the relevant data in the table with the previous years to analyze the rationality of some changes in this year.
2. Calculate the ratio of the prepaid insurance amount to the insurance premium and compare it with the previous year.
3. Check whether the insurance coverage has changed in the current period, whether some insurance policies have been canceled, analyze the reasons, and confirm the appropriateness of the insurance coverage.
(3) Judging that the insurance business listed in the detailed list of prepaid insurance premiums has actually occurred, and all the insurance business that has occurred has been recorded in the current account, and complete the inspection of completeness and authenticity accordingly. The methods that can be used are as follows:
1. Letter to the insurance company.
2. Check all kinds of original documents for inconsistencies.
(4) Check whether the prepaid insurance premiums are all owned by the customer, that is, check whether there are other claimants on the insurance policy, to find unrecorded liabilities and mortgage assets.
(5) Check that the calculation of each item is correct, the valuation of each item is correct, and the total of the subsidiary ledger is consistent with the general ledger.
(6) Check the disbursements related to prepaid insurance money to see if they are classified correctly and are consistent with previous years.
(7) Briefly check whether the recording of the insurance business has paid attention to the correctness of the recording period. Check whether the various expenses are indeed deferred and whether there are items that should not be borne later and listed as later burdens. At the same time, check whether the projects that should be borne in the next period have been transferred to deferred projects.
(8) Check whether the items listed as deferred assets have been paid and recorded in the corresponding accounts and whether the accounting entries are correct.