Areas of Focus in Captive Audits

Captive Operation and Services | Gary Bowers | Partner | Johnson Lambert LLP

Gary Bowers of Johnson Lambert details three primary areas auditors are concerned with when dealing with captive insurance companies: (1) Taxes—Examining book-tax differences and other permanent, material items that may require adjustments to the captive financial statement. Examples include discounts applied to loss reserves or unearned premium discounts. (2) Reserves—Carefully examining loss data to ensure the data used by the captive's actuary is qualified. (3) Investments—More companies are looking into alternative investments and using alternative investment vehicles that involve a more complex valuation process to reflect accurate values.