Which of the following is a key function of a compliance audit?

A key function of a compliance audit is to ensure adherence to internal and external practices, which encompasses evaluating how well an organization follows established regulations, standards, and procedures. Compliance audits assess whether the company's operations align with legal requirements, industry guidelines, and its own internal policies. This is vital in the insurance sector, where regulatory compliance is critical for maintaining company integrity and avoiding potential legal issues.

By focusing on compliance, these audits help identify areas where practices may not align with necessary regulations, thereby enabling the organization to mitigate risks and enhance operational effectiveness. Such audits are fundamental in maintaining trust and accountability in the insurance industry, ensuring that the company operates within the legal frameworks and upholds ethical standards.