Let's say you are part of the audit team of a Trucking and Logistics Corporation. You were assigned to audit the prepaid insurance account of the company. You scanned the subsidiary ledgers of the prepaid insurance account and noted that a significant portion ONLY pertains to the compulsory third-party liability (CTPL) insurance of its fleet of trucks and delivery vehicles. Your engagement senior was concerned and remarked to vouch and scan the insurance policies and check for the coverage. He asked you to give feedback at end-of-day.

questions:

• Given the nature of the business and its usual risks, what could be the probable contents of an audit notes for discussion with your senior?
• also please explain what a compulsory third-party liability is and how this is concerning in an audit?