EVALUATION OF INSURANCE ACCOUNTING SYSTEM IN Sudan

Abstract

Though insurance as an economic activity has been known since a long time in the world, yet it was practiced in the Sudan only in the 19th century. Foreign companies through their branches and agents were the only enterprises which conducted insurance business in the Sudan in the early stages.

After the nationalization and confiscation policy in 1970 all the activities of the foreign companies (including insurance ones) were liquidated or replaced by Sudanese companies. The controller of Insurance Act 1960 was amended to prohibit the foreign insurance companies from issuing any insurance policies. Accordingly, all the insurance companies in Sudan became owned by Sudanese businessmen.

Before the nationalization and confiscation of foreign insurance companies, all of the insurance activities were handled by foreign staff. As a result the Sudanese companies experienced some difficulties in running their business affairs due to lack of qualified personnel.

This study has attempted to investigate the problem of proper accounting system in the field of insurance business though the accounting procedures are the same with other business enterprises.

The study revealed severe shortage of the prescribed forms of the balance sheet and profit and loss account which are not in wide range of circulation. The Ministry of Finance and National economy is adamant in the provision and circulation of this prescribed forms for adequate use in the insurance accounting system.

The study followed an analytical approach to investigate the problem. The main source of data were: (i) Verbal contacts and interviews with the financial manager and head of other departments. (ii) A questionnaire distributed to the personnel department. The secondary data was gathered from the literature available in the field of insurance.

The study concluded that: (i) There is need for the Ministry of Finance and National Economy to avail the prescribed accounting form. (ii) There is also need to separate the functions of operation and custodian of cash from he functions of recording.

The study recommends that: (i) The Ministry of Finance and National Economy should not be adamant to avail the prescribed forms for proper accounting use as stipulated. (ii) Proper control of finance in an enterprise, organization and government need an internal audit, most of the insurance firms don’t abide to this, hence internal audit department is of necessity for internal control purpose. (iii) Functions of operation and custodian of cash from the functions of recording be separated to avoid misappropriation of funds. (iv) Computers should be installed to minimize cost.