Section 85: Audit Committee of Insurer

1) The insurance company which had obtained a license to operate insurance business after commencement of this act shall within thirty days of commencement of its insurance business or the insurance company existing at the commencement of this act which had not formed an Audit Committee shall within thirty days of commencement of this act, form an Audit Committee comprising of three members under the convener-ship of a director representative from general shareholders.

2) The chairman or chief executive officer or chief of accounts department of their close relatives shall not be member of the Audit Committee formed as per sub section (1).

3) The functions, duties and powers of the Audit Committee shall be as follows:-

(a) To review the financial statements of the insurer and ensure the basis, authenticity and reliability of information extracted from such financial statements,

(b) To ascertain whether or not the accounts, budget and internal control mechanism of insurer are appropriate or not,

(c) To ensure whether the purchase/procurement policy of the insurer is appropriate, efficient and economical and to supervise and regulate such purchase/procurement policy,

(d) To ensure whether the accounts, documents and records of internal audit systems  and electronic records are maintained appropriately,

(e) To ensure whether the activities related to calculation of insurance risks, claims, investments, and reinsurance had been done properly or not and to ensure whether the documents related to such activities had been adequately maintained or not,

(f) To ensure whether the accounts, audit balance sheet or financial statements of the insurer or such documents are prepared according to the prevailing law, regulation and directives of the Nepal Insurance Authority,

(g) To recommend names of three auditors for appointment of the external auditor,

(h) To furnish opinion on the subjects as required by the Board of Directors,

(i) To ensure whether or not the insurer had complied with the directives issued by the Nepal Insurance Authority.

4) The Audit Committee shall submit a report of its activities to the board of directors of the company.