1. Auditor: After conducting the audit, these are the issues that I have come up with.

I
would like to discuss them with you.

Head of Claims: Yes, go ahead.

2. A: Firstly, we have observed that sufficient verification procedures have not been
carried out to test the truthfulness of an incoming claim on “date” by “Name”
policyholder for “Amount” while all other incoming claims higher than “amount”
have been verified properly.

HoC: We actually choose the level of verification procedures to apply based on a cost
benefit analysis for each individual claim. For that particular case, an employee in
our department had reported that based on the cost benefit analysis he carried out,
it was too expensive to carry out the additional verification processes. Besides, the
policyholder’s family has been our loyal customer for several years.

3. A: We will have to look into that.

The other issue is that in certain cases, approval by senior manager for high claim
disbursements has not been obtained.

4. A: Lastly, we have observed an issue in the training of field investigators in the claims
department. The company has not been engaging in continuous professional
development for its staff and conducting annual refresher training programs as it is
required to do.

HoC: I have taken note of these issues and will ensure that the necessary steps are
carried out to avoid these problems coming up again in the next audit.

Auditor communicates with his team:

5. Auditor 1: Based on our findings, we have reason to believe that one of the
employees has colluded with the policyholder for the ‘Amount in issue 1 above’
claim. We will have to conduct a fraud investigation.

6. Auditor 2: We have also discovered an internal control flaw where for claim
disbursements beyond ‘amount in issue 2 above,’ authorization by the senior
personnel has not been obtained.

Auditor 1: These findings will be reported.

7. Auditor 2 to his team: As we are nearing the completion of our audit and have
covered our audit checklist, we will start drafting the report and hold an exit meeting
with the MIS head.

Auditor communicates with the MIS head:

8. Head Auditor: Here is the report with all our findings and recommendations and our
audit opinion. It also includes the responses of the head of the claims department.

MIS Head: We thank you and your team for your services.