lA guide to adopting automation in internal audits | Critical Risks for Re-insurance process of a Life Insurance company

With the introduction of automation technology, Audit and Governance Committees have shifted from sample-based auditing to population-based auditing. Due to increased business transactions and no additional staff to perform population-based auditing, CAEs across organizations are adopting technology for audits. Internal Audit departments, regardless of size, have started utilizing automation by incorporating traditional analytics, predictive models, and robotic process automation (RPA).

Key questions for CAEs at the start of automation include:

• • How to begin?

• • Which activities to automate?

• • What technology to use?

• • Ideal time frame?

• • Resources needed?

IA can use automation in risk assessments, audit planning, fieldwork, and reporting. The best practice is to automate the entire audit lifecycle on a single platform.

CAEs often struggle with starting audit automation. This blog will address “how to start?” and “which activities to automate?” with examples from the reinsurance process of a life insurance company.

“How to start?” and “Which activities to be automated?”

Step 1: List all critical risks within the organization.

Step 2: Map the degree of digital source data availability against each identified critical risk.

Step 3: Select risks with complete digital source data availability to assess the complexity level of exception monitoring rules for automation.

Step 4: Categorize each risk identified in Step 3 into “simple,” “moderate,” or “complex” based on the complexity level of the rule required for exception monitoring.

Step 5: Select all risks categorized as simple for Phase I, followed by moderate and complex categories in subsequent phases.

Case study: Audit Automation for Re-insurance Process:

Auditing the Reinsurance function requires assessing large data sets like Reinsurance Bordereaux, Retention masters, Reserve tables, and Issuance data from the Policy Admin system to identify financial losses or revenue leaks.

Key challenges included IT dependency for data extraction, potential data integrity issues, and error-prone manual data assessment.

Exceptions from Drut for key critical risks:

The Next Steps: Start Your Automation Journey

This case study illustrates the power of automation in streamlining internal audit processes. While drut offers a robust suite of automation solutions specifically designed for internal auditors, the principles discussed here are broadly applicable. By following the steps outlined in this guide and exploring the range of automation tools available, CAEs can embark on a successful automation journey, empowering their internal audit teams to address the challenges of today’s data-driven environment. Schedule a demo with us today to learn how drut can transform your internal audit function.