What it is
An insurance agency holds premium money that belongs to carriers and clients, and the audit has to show that the account holding it covers what is owed. This workbook reconciles the premium trust account to the ledger and sets the balance against premiums payable to carriers, refunds owed to clients and commissions earned but not yet withdrawn.
It then tests commission income against carrier statements by carrier and accrues contingent commissions only where the result meets the threshold, with a trace to the statement received after year end. Contingent amounts are variable consideration, so the sheet accrues nothing until the test is met.
When to use it
- On every audit of an insurance agency or brokerage that collects premiums for carriers.
- Each month-end, as the agency’s own control over the fiduciary account.
- When a state examiner or a carrier asks for a reconciliation of premium trust funds.
What’s inside
- Fiduciary tab: bank reconciliation, required balance and shortfall flag
- Carriers tab: agency-bill and direct-bill premium, commission earned and net payable
- Commissions tab: carrier statement to ledger by carrier with an explained flag
- Contingent tab: loss ratio test, accrual and trace to the later statement
Standard cited
This template follows ASC 606. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Does this tell me whether the agency may commingle funds?
No. State law sets what an agency may do with fiduciary funds and when it may withdraw commission. The workbook shows the numbers. The rules for each state where the agency is licensed come from the state insurance department.
Why is a negative net payable to a carrier flagged?
It means the agency remitted more than it collected net of commission. That is either a receivable from the carrier or an error, and it should be resolved rather than netted against other carriers.
How should contingent commissions be recorded?
As variable consideration, included in revenue only to the extent it is probable that a significant reversal will not occur. Compare the accrual with the carrier statement received after year end and replace the simple threshold test with the real bonus schedule.
Related templates
- Accounts Payable Confirmation (Vendor Statement Request, AU-C 505)
- Bank Reconciliation Template (Excel)
- Audit Program: Insurance Agency or Brokerage
- Cutoff Testing Workpaper (Sales, Purchases, Inventory)
Last updated 11/05/2026. All free templates.