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Development of internal audit's legal framework for European insurance companies in Lehman's and others shadow

Abschlusspruferrichtlinie - Compliance - Governance - Interne Revision - Interne Unternehmensiiberwachung — Internes Kon- trollsystem- dsterreichisches Versicherungsauf- sichtsgesetz - Solvency II - fVhistleblowing

After the decision ofthe European Council in October 2010, Serbia is now a step closer to the European Union and to the regulations for the European lnsurance lndustry. The law made in occasion of the bankruptcies from Enron. WorldCom and others in 2002 was not strong enough to avoid Lehman s bankruptcy, AIG 's troubles and Madoff's fraud. We don 't know if the the Wall Streeet Reform Act 2010 can be sufficient enough. Beginning in 2013 the European Insurance Industrv will be regulated by the European Directive Solvencv II. This directive demands not onlv risk based quantitative Solvency requirements but also a strong government system including the key functions Riskmanagement, Actuary, Compliance and lnternal Audit. Persons working in these functions are obliged to be Jit and proper. ln Serbia as in Austria there are sufficientpublic regulations for InternalAudit. The Internal Audit in Serbia is more under influence ofSupervisoty Board in Austria of the Management Board. In Serbia the audit procedures and requirements for auditors are ftxed by law and there is only pour space for decisions within the companies. It seems dangerous iflnternal Audit would be used as instrument of the Supervisory Authoritv. Internal Audit always has to be an essentialpart ofinternal Supervision and not assistant ofexternal Supervision. Intemal Auditors are forced to increase competence and to change auditing practice.

Peter Hauser


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