CHAPTER 1

INTRODUCTION OF ACCOUNTING
Accounting can be defined as a process of reporting,
recording, interpreting and summarising economic
data. The introduction of accounting helps the
decision-makers of a company to make effective
choices, by providing information on the financial
status of the business. Accounting
also known as, accountancy, is the measurement,
processing, and communication of financial and non-
financial information about economic entities such as
businesses and corporations. Accounting, which has
been called the "language of business, measures the
results of an organization's economic activities and
conveys this information to a variety of users,
Learning objective including investors, creditors, management, and
After studying this regulators, Practitioners of accounting are known as
chapter you will be able to:
accountants. The terms "accounting" and "financial
1.State the meaning and
need of accounting. reporting" are often used as synonyms. Accounting
2.Discuss accounting as a can be divided into several fields including financial
source of information.
accounting, management accounting, tax accounting
3.Identify the internal and
external users of accounting and cost accounting. Accounting information systems
information.
are designed to support accounting functions and
4.Explain the objective of
accounting. related activities. Financial accounting focuses on the
5.Describe the role of reporting of an organization's financial information,
accounting.
including the preparation of financial statements, to
the external users of the information, such an
 investors, regulators and suppliers and management
accounting focuses on the measurement, analysis and
reporting of information for internal use by
management. The recording of financial transactions,
so that summaries of the financials may be presented
in financial reports, is known as bookkeeping, of
which double-entry bookkeeping is the most common
system.

HISTORY

Accounting is thousands of years old and can be

traced to ancient civilizations. The early development
of accounting dates back to ancient Mesopotamia, and
is closely related to developments in writing, counting
and money; there is also evidence of early forms of
bookkeeping in ancient Iran, and early auditing
systems by the ancient Egyptians and Babylonians. By
the time of Emperor Augustus, the Roman
government had access to detailed financial
information. For some, the first name that might come
to mind when referencing early accounting history is
Luca Pacioli. Pacioli described double-entry
bookkeeping in his “Summa de Arithmetica,
Geometria, Proportioni et Proportionalita” back in
1494. While that may sound like a long time ago,
accounting may have roots that trace back even
earlier. Accounting has been around for centuries. It’s
a critical part of the business, record-keeping, and life
 in general. The first record of accounting occurred
thousands of years ago in Mesopotamia and has
evolved into the intricate element of business and life
that it is today. Below is an informative guide that
explores a short history of how accounting has
evolved over thousands of years.

MEANING OF ACCOUNTING

Accounting plays an important role in smooth functioning of business

organisation through systematic recording of business transactions. It also
provides various information to business and its stakeholders such as –
creditors, bankers, tax authorities, shareholders, suppliers etc., through
systematic maintenance of books of accounts and access to these accounts as
and when required. Thus, we cannot think of any business organisation without
use of accounting in the modern world.

Accounting is basically an Information System. Because, it is designed

primarily to serve the different stakeholders in their decision-making process by
providing them necessary, timely and relevant information.

In 1941, The American Institute of Certified Public Accountants (AICPA) had

defined accounting as the art of recording, classifying, and summarising in a
significant manner and in terms of money, transactions and events which
are, in part at least, of financial character, and interpreting the results thereof’.
With greater economic development resulting in changing role of accounting,
its scope, became broader. In 1966, the American Accounting Association
(AAA) defined accounting as ‘the process of identifying, measuring and
communicating economic information to permit informed judgments and
decisions by users of information’
In 1970, the Accounting Principles Board of AICPA also emphasised that
the function of accounting is to provide quantitative information, primarily
financial in nature, about economic entities, that is intended to be useful in
making economic decisions.
Accounting can therefore be defined as the process of identifying,
measuring, recording and communicating the required information relating
to the economic events of an organisation to the interest.

OBJECTIVES OF ACCOUNTING
The basic objectives of accounting is to provide necessary information to the
persons interested who will make relevant decisions and form judgement. The
persons interested in the business are classified into two types i) Internal users,
and ii) External users. Internal users are those who manage the business.
External users
are those other than the internal users such as investors, creditors, Government,
etc.

Information required by the external users are provided through Profit and Loss

account and Balance sheet whereas the internal users get required information
from

the records of the business. Thus the main objectives of accounting are as
follows:

1) To keep systematic records of the business: Accounting keeps a systematic

record of all financial transactions like purchase and sale of goods, cash receipts

and cash payments etc. It is also used for recording all assets and liabilities of

the business. In the absence of accounting it is impossible to a human being to

keep in memory all business transactions.

2) To ascertain profit or loss of the business: By keeping a proper record of

revenues and expenses of business for a particular period, accounting helps in

ascertaining the profit or loss of the business through the preparation of profit

and loss account. Profit and Loss account helps the interested parties in

assessing the profit or loss made by the business during a particular period. It

also helps the management to take remedial action in case the business has not

proved remunerative or profitable. A proper record of all incomes and expenses

helps in preparing a profit and loss account and in ascertaining net operating

results of a business during a particular period.

3) To ascertain the financial position of business: The business man is also

interested to know the financial position of his business apart from operating

results of the business during a particular period. In other words, he wants to

know how much he owns and how much owes to others. He would also like to

know what happened to his capital, whether it has increased or decreased or

remained constant. A systematic record of assets and liabilities facilitates the

preparation of a position statement called Balance Sheet which provides

necessary information to the above questions. Balance Sheet serves as

barometer for ascertaining the financial solvency of the business.

4) To provide accounting information to interested parties: Apart from

owners there are various parties who are interested in the accounting
information. These are bankers, creditors, tax authorities, prospective investors
etc. They need such information to assess the profitability and the financial
soundness of the business. The accounting information is communicated to
them in the form of an annual report.

Financial Accounting

The American Institute of Certified Public Accountants has defined Financial

Accounting as “the art of recording, classifying and summarizing in a

significant manner in terms of money transactions and events which are in part
at least of a financial character, and interpreting the results thereof”. Accounting
is the language effectively employed to communicate the financial information
of a business unit of various parities interested in its progress.

The object of financial accounting is to find out the profitability and to provide

information about the financial position of the concern. Two important

statements of financial accounting are Income and Expenditure Statement and
Balance Sheet.
All revenue transactions relating to a particular period are recorded in this
statement to decide the profitability of the concern. The balance sheet is
prepared at a particular date to determine the financial position of the concern.

Functions of Financial Accounting

Financial accounting provides information regarding the status of the business

and results of its operations to management as well as to external parties. The
following are some of the important functions of financial accounting :

a) Recording of Information

In business, it is not possible to keep in memory all the transactions. These

transactions need to be systematically recorded and pass through the journals,

ledgers and worksheets before they could take the form of final accounts. Only

those transactions are recorded which are measurable in terms of money. The

transactions which cannot be expressed in monetary terms does not form part of

financial accounting even though such transactions have a significant bearing on

the working of a business.

Fundamentals of Accounting

b) Managerial Decision Making

Financial accounting is greatly helpful for managers in taking decisions.

Without accounting, the managerial functions and decision making programmes

may mislead. The performance of daily activities are to be compared with the

predetermined standards. The variations of actual operations and their analysis

are possible only with the help of financial accounting.

c) Interpreting Financial Information

Interpretation of financial information is very important for decision making.

The recorded financial data is interpreted in such a manner that the end users

such as creditors, investors, bankers etc., can make a meaningful judgment

about the financial position and profitability of the business operations.

d) Communicating Results

Financial accounting is not only concerned with the recording of facts and

figures but it is also connected with the communication of results. In fact

accounting is the source of business operation. Therefore, the information

accumulated and measured should be periodically communicated to the users.

The information is communicated through statements and reports. The financial

statements and reports should be reliable and accurate. A variety of reports are

needed for internal management depending upon its requirement. In

communicating reports to outsiders, standard criteria of full disclosure,

materiality, consistency and fairness should be adhered to.

ACCOUNTING ASSUMPTIONS AND POLICIES AS PER
ACCOUNTING STANDARDS OF INDIA

Accounting measurements are not always uniform. Some financial quantities

can be measured in two or more different ways. The management with the help
of company’s accountant decides which measurement alternatives are to be
used. These choices are known as ‘accounting policies. These accounting
polices differ from company to company. Therefore, it is advisable to each
company to state in the notes of its financial statements which accounting policy
it has followed. The company should not change its policy frequently and when
there is a change in the policy, the company should justify the reason for such a
change.

The management is not completely free in choosing any accounting policies

because selection of policy must fit within the limits set by the measurement
guidelines known as ‘generally accepted accounting principles’ as well as to
comply statutory requirements. For example, The Central Board of Direct Taxes
requires the following information to be disclosed in respect of change in
accounting polices: 1) A change in accounting policy shall be made only if the
adoption of different accounting policy is required by statute or if it is
considered that the change would result in more appropriate in preparation or
presentation of the financial statements of an assessee.

2) Any change in accounting policy which has material effect shall be disclosed
in the financial statements of the period in which such change is made. Where
the effect of such change is not ascertainable or such change has no material
effect on the financial statements for the previous year but has material effect in
years subsequent to the previous year, the fact shall be stated in the previous
year in which such change is adopted. Materiality of an item depends on its
amount and nature. An item should also be considered material if the
knowledge of it would influence the decisions of the investors. Materiality
varies from one business to another business. Similarly, an item which is
material in one year may not be material in the next year. While preparing
financial statements it is, therefore, necessary to give emphasis only on those
matters which are significant and thereby ignoring insignificant matters. In
order to bring uniformity for the presentation of accounting results, the Institute
of Chartered Accountants of India, established an Accounting Standard Board
(ASB) in April, 1977. The Board consists of representatives from industry and
government. The main function of ASB is to formulate accounting standards to
be followed while preparing and interpreting the financial results. While
framing the accounting standards, the ASB will pay due attention to the
International Accounting Standards and try to integrate them to the possible
extent. It also takes into account the prevailing laws, customs and business
environment prevailing in India. To improve quality and bring parity with the
presentation of financial statements in India, the ASB has formulated the
following accounting standards:

AS 1 Disclosure of Accounting Policies

AS 2 Valuation of Inventories

AS 3 Cash Flow Statements

AS 4 Contingencies and Events occurring after Balance Sheet Date

AS 5 Net Profit or Loss, Prior Period Items and Changes in Accounting Policies

AS 6 Depreciation Accounting

AS 7 Accounting for Construction Contracts

Accounting: An Overview

AS 8 Accounting for Research and Development

AS 9 Revenue Recognition

AS 10 Accounting for Fixed Assets

AS 11 Accounting for the Effect of Changes in Foreign Exchange Rates

AS 12 Accounting for Government Grants

AS 13 Accounting for Investments

AS 14 Accounting for Amalgamations

AS 15 Accounting for Retirements Benefits in the Financial Statements of
Employers

AS 16 Borrowing Costs

AS 17 Segment Reporting

AS 18 Related Party Disclosures

AS 19 Leases

AS 20 Consolidated Financial Statement

AS 21 Earnings per Share

AS 22 Accounting for Taxes on Income

AS 23 Accounting for Investments in Consolidated Financial Statements

AS 24 Discounting Operations

AS 25 Interim Financial Reporting

AS 26 Intangible Assets

AS 27 Financial Reporting of Interest in Joint Venture

GLOBAL VIEW OF ACCOUNTING

International Financial Reporting Standards
International Accounting Standards (IAS) are older accounting standards issued
by the International Accounting Standards Board (IASB) an independent
international standard-setting body based in London. The IAS were replaced in
2001 by International Financial Reporting Standards (IFRS). International
accounting is a subset of accounting that considers international accounting
standards when balancing books.

Understanding International Accounting Standards (IAS)

International Accounting Standards (IAS) were the first international accounting
standards that were issued by the International Accounting Standards
Committee (IASC), formed in 1973. The goal then, as it remains today, was to
make it easier to compare businesses around the world, increase transparency
and trust in financial reporting, and foster global trade and investment.

Globally comparable accounting standards promote transparency,

accountability, and efficiency in financial markets around the world. This
enables investors and other market participants to make informed economic
decisions about investment opportunities and risks and improves capital
allocation. Universal standards also significantly reduce reporting and
regulatory costs, especially for companies with international operations and
subsidiaries in multiple countries.

Accounting & Auditing Standard in Sri Lanka

1. The Sri Lanka monitoring board SLAASMB is mainly responsible for

monitoring the standards of accounting and auditing in relation to financial
statements that is specified in Act No 15 of 1995.

2. (1) The Institute of Chartered Accountants of Sri Lanka can adopt changes

that is necessary for the purpose of maintaining a uniform and high standard in
the preparation and presentation of accounts of business enterprises. The
accounting rules of Sri Lanka adopted pursuant to sub article (1) will be
published in the bulletin and will take effect from the date of publication or a
later date that can be specified

3. (1) The Institute shall from time to time adopt the appropriate auditing
standards, that may be necessary for the management of the audit of business
account of the institute (2) The Sri Lanka Audit Standards adopted the
subsection 1 (1) shall be published in the Bulletin and shall take effect from the
date of publication or at a later date specified therein.
As per the ACT Sri Lanka Accounting Standards and Sri Lanka Auditing
Standards adopted by the Institute that is further published in the Gazette are
applicable to those business organizations and industries as specified in the
schedule to the Act itself.

INTRODUCTION TO INSURANCE
Insurance is a means of protection from financial loss. It is a form of risk
management, primarily used to hedge against the risk of a contingent or
uncertain loss.

An entity which provides insurance is known as an insurer, an insurance

company, an insurance carrier or an underwriter. A person or entity who buys
insurance is known as a policyholder, while a person or entity covered under the
policy is called an insured. Policyholder and insured are often used as but are
not necessarily synonyms, as coverage can sometimes extend to additional
insureds who did not buy the insurance. The insurance transaction involves the
policyholder assuming a guaranteed, known, and relatively small loss in the
form of payment to the insurer in exchange for the insurer's promise to
compensate the insured in the event of a covered loss. The loss may or may not
be financial, but it must be reducible to financial terms, and usually involves
something in which the insured has an insurable interest established by
ownership, possession, or pre-existing relationship.

The insured receives a contract, called the insurance policy, which details the
conditions and circumstances under which the insurer will compensate the
insured, or their designated beneficiary or assignee. The amount of money
charged by the insurer to the policyholder for the coverage set forth in the
insurance policy is called the premium. If the insured experiences a loss which
is potentially covered by the insurance policy, the insured submits a claim to the
insurer for processing by a claims adjuster. A mandatory out-of-pocket expense
required by an insurance policy before an insurer will pay a claim is called a
deductible (or if required by a health insurance policy, a payment ). The insurer
may hedge its own risk by taking out reinsurance, whereby another insurance
company agrees to carry some of the risks, especially if the primary insurer
deems the risk too large for it to carry.

Principles
Insurance involves pooling funds from many insured entities (known as
exposures) to pay for the losses that some may incur. The insured entities are
therefore protected from risk for a fee, with the fee being dependent upon the
frequency and severity of the event occurring. In order to be an insurable risk,
the risk insured against must meet certain characteristics. Insurance as a
financial intermediary is a commercial enterprise and a major part of the
financial services industry, but individual entities can also self-insure through
saving money for possible future losses.

Insurability

Risk which can be insured by private companies typically share seven common
characteristics Large number of similar exposure units: Since insurance operates
through pooling resources, the majority of insurance policies cover individual
members of large classes, allowing insurers to benefit from the law of large
numbers in which predicted losses are similar to the actual losses. Exceptions
include Lloyd's of London, which is famous for ensuring the life or health of
actors, sports figures, and other famous individuals. However, all exposures will
have particular differences, which may lead to different premium rates.

Definite loss: This type of loss takes place at a known time and place, and from
a known cause. The classic example involves the death of an insured person on
a life-insurance policy. Fire, automobile accidents, and worker injuries may all
easily meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to injurious
conditions where no specific time, place, or cause is identifiable. Ideally, the
time, place, and cause of a loss should be clear enough that a reasonable person,
with sufficient information, could objectively verify all three elements.

Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the insurance. The
loss should be pure, in the sense that it results from an event for which there is
only the opportunity for cost. Events that contain speculative elements such as
ordinary business risks or even purchasing a lottery ticket are generally not
considered insurable.

Large loss: The size of the loss must be meaningful from the perspective of the
insured. Insurance premiums need to cover both the expected cost of losses,
plus the cost of issuing and administering the policy, adjusting losses, and
supplying the capital needed to reasonably assure that the insurer will be able to
pay claims. For small losses, these latter costs may be several times the size of
the expected cost of losses. There is hardly any point in paying such costs
unless the protection offered has real value to a buyer.

Affordable premium: If the likelihood of an insured event is so high, or the cost

of the event so large, that the resulting premium is large relative to the amount
of protection offered, then it is not likely that insurance will be purchased, even
if on offer. Furthermore, as the accounting profession formally recognizes in
financial accounting standards, the premium cannot be so large that there is not
a reasonable chance of a significant loss to the insurer.

Legal

When a company insures an individual entity, there are basic legal requirements
and regulations. Several commonly cited legal principles of insurance include:
Indemnity – the insurance company indemnifies or compensates, the insured in
the case of certain losses only up to the insured's interest.

Benefit insurance – as it is stated in the study books of The Chartered Insurance

Institute, the insurance company does not have the right of recovery from the
party who caused the injury and is to compensate the Insured regardless of the
fact that Insured had already sued the negligent party for the damages (for
example, personal accident insurance)

Insurable interest – the insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a
person is involved. The concept requires that the insured have a "stake" in the
loss or damage to the life or property insured. What that "stake" is will be
determined by the kind of insurance involved and the nature of the property
ownership or relationship between the persons. The requirement of an insurable
interest is what distinguishes insurance from gambling.

Utmost good faith – (Uberrima fides) the insured and the insurer are bound by a
good faith bond of honesty and fairness. Material facts must be disclosed.

Contribution – insurers which have similar obligations to the insured contribute

in the indemnification, according to some method.

Subrogation – the insurance company acquires legal rights to pursue recoveries

on behalf of the insured; for example, the insurer may sue those liable for the
insured's loss. The Insurers can waive their subrogation rights by using the
special clauses.

Causa proxima, or proximate cause – the cause of loss (the peril) must be
covered under the insuring agreement of the policy, and the dominant cause
must not be excluded
Mitigation – In case of any loss or casualty, the asset owner must attempt to
keep loss to a minimum, as if the asset was not insured.

Indemnification

To "indemnify" means to make whole again, or to be reinstated to the position

that one was in, to the extent possible, prior to the happening of a specified
event or peril. Accordingly, life insurance is generally not considered to be
indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on
the occurrence of a specified event). There are generally three types of
insurance contracts that seek to indemnify an insured:

A "reimbursement" policy

A "pay on behalf" or "on behalf of policy"

An "indemnification" policy

From an insured's standpoint, the result is usually the same: the insurer pays the
loss and claims expenses.

If the Insured has a "reimbursement" policy, the insured can be required to pay
for a loss and then be "reimbursed" by the insurance carrier for the loss and out
of pocket costs including, with the permission of the insurer, claim expenses.

Under a "pay on behalf" policy, the insurance carrier would defend and pay a
claim on behalf of the insured who would not be out of pocket for anything.
Most modern liability insurance is written on the basis of "pay on behalf"
language, which enables the insurance carrier to manage and control the claim.

Under an "indemnification" policy, the insurance carrier can generally either

"reimburse" or "pay on behalf of", whichever is more beneficial to it and the
insured in the claim handling process.
An entity seeking to transfer risk (an individual, corporation, or association of
any type, etc.) becomes the "insured" party once risk is assumed by an
"insurer", the insuring party, by means of a contract, called an insurance policy.
Generally, an insurance contract includes, at a minimum, the following
elements: identification of participating parties (the insurer, the insured, the
beneficiaries), the premium, the period of coverage, the particular loss event
covered, the amount of coverage (i.e., the amount to be paid to the insured or
beneficiary in the event of a loss), and exclusions (events not covered). An
insured is thus said to be "indemnified" against the loss covered in the policy.

When insured parties experience a loss for a specified peril, the coverage
entitles the policyholder to make a claim against the insurer for the covered
amount of loss as specified by the policy. The fee paid by the insured to the
insurer for assuming the risk is called the premium. Insurance premiums from
many insureds are used to fund accounts reserved for later payment of claims –
in theory for a relatively few claimants – and for overhead costs. So long as an
insurer maintains adequate funds set aside for anticipated losses (called
reserves), the remaining margin is an insurer's profit.

Exclusions

Policies typically include a number of exclusions, including typically:

Nuclear exclusion clause, excluding damage caused by nuclear and radiation

accidents War exclusion clause, excluding damage from acts of war or
terrorism. Insurers may prohibit certain activities which are considered
dangerous and therefore excluded from coverage. One system for classifying
activities according to whether they are authorised by insurers refers to "green
light" approved activities and events, "yellow light" activities and events which
require insurer consultation and/or waivers of liability, and "red light" activities
and events which are prohibited and outside the scope of insurance cover.

LIFE INSURANCE
Life insurance provides a monetary benefit to a decedent's family or other
designated beneficiary, and may specifically provide for income to an insured
person's family, burial, funeral and other final expenses. Life insurance policies
often allow the option of having the proceeds paid to the beneficiary either in a
lump sum cash payment or an annuity. In most states, a person cannot purchase
a policy on another person without their knowledge Annuities provide a stream
of payments and are generally classified as insurance because they are issued by
insurance companies, are regulated as insurance, and require the same kinds of
actuarial and investment management expertise that life insurance requires.
Annuities and pensions that pay a benefit for life are sometimes regarded as
insurance against the possibility that a retiree will outlive his or her financial
resources. In that sense, they are the complement of life insurance and, from an
underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by
the insured if the policy is surrendered or which may be borrowed against.
Some policies, such as annuities and endowment policies, are financial
instruments to accumulate or liquidate wealth when it is needed.

In many countries, such as the United States and the UK, the tax law provides
that the interest on this cash value is not taxable under certain circumstances.
This leads to widespread use of life insurance as a tax-efficient method of
saving as well as protection in the event of early death.
In the United States, the tax on interest income on life insurance policies and
annuities is generally deferred. However, in some cases the benefit derived from
tax deferral may be offset by a low return. This depends upon the insuring
company, the type of policy and other variables (mortality, market return, etc.).
Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth
IRAs) may be better alternatives for value accumulation.

Parties to contract
The person responsible for making payments for a policy is the policy owner,
while the insured is the person whose death will trigger payment of the death
benefit. The owner and insured may or may not be the same person. For
example, if Joe buys a policy on his own life, he is both the owner and the
insured. But if Jane, his wife, buys a policy on Joe's life, she is the owner and he
is the insured. The policy owner is the guarantor and they will be the person to
pay for the policy. The insured is a participant in the contract, but not
necessarily a party to it.

The beneficiary receives policy proceeds upon the insured person's death. The
owner designates the beneficiary, but the beneficiary is not a party to the policy.
The owner can change the beneficiary unless the policy has an irrevocable
beneficiary designation. If a policy has an irrevocable beneficiary, any
beneficiary changes, policy assignments, or cash value borrowing would require
the agreement of the original beneficiary.

In cases where the policy owner is not the insured (also referred to as the celui
qui vit or CQV), insurance companies have sought to limit policy purchases to
those with an insurable interest in the CQV. For life insurance policies, close
family members and business partners will usually be found to have an
insurable interest. The insurable interest requirement usually demonstrates that
the purchaser will actually suffer some kind of loss if the CQV dies. Such a
requirement prevents people from benefiting from the purchase of purely
speculative policies on people they expect to die. With no insurable interest
requirement, the risk that a purchaser would murder the CQV for insurance
proceeds would be great. In at least one case, an insurance company which sold
a policy to a purchaser with no insurable interest (who later murdered the CQV
for the proceeds), was found liable in court for contributing to the wrongful
death of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).

Contract terms
Special exclusions may apply, such as suicide clauses, whereby the policy
becomes null and void if the insured dies by suicide within a specified time
(usually two years after the purchase date; some states provide a statutory one-
year suicide clause). Any misrepresentations by the insured on the application
may also be grounds for nullification. Most US states, for example, specify a
maximum contestability period, often no more than two years. Only if the
insured dies within this period will the insurer have a legal right to contest the
claim on the basis of misrepresentation and request additional information
before deciding whether to pay or deny the claim.

The face amount of the policy is the initial amount that the policy will pay at the
death of the insured or when the policy matures, although the actual death
benefit can provide for greater or lesser than the face amount. The policy
matures when the insured dies or reaches a specified age (such as 100 years
old).
 Aviva India is an Indian life assurance
company, and a joint venture between Aviva
plc, a British assurance company, and Dabur
Group, an Indian conglomerate. Aviva began
operations in July 2002 as a joint venture with
Dabur Group, one of India’s oldest business
houses. As per the Indian insurance sector
regulations, Aviva plc has a 49% stake and
Dabur has a 51% stake in the JV partnership.

Operations

Aviva has been focusing on the Online Platform in recent years, and a number
of products, including Aviva i-Life, Aviva Health Secure and Aviva i-Shield.
This is in line with the company’s strategy to focus on newer formats and
products that are easier for customers to understand and buy.
Corporate social responsibility

Aviva India conducts the Aviva Great Wall of Education in various cities each
year, which collects books for underprivileged children. Over the last three
years, the Aviva Great Wall of Education has collected more than 2 million
books, which have been given to more than 500,000 underprivileged children
across the country. The Aviva Great Wall of Education collected over 1.1
million books in 2011 alone.
The Aviva Great Wall of Education was also listed in the Limca Book of
Records for being the ‘largest wall of books’ for its debut year. It has received
multiple awards, including the Bronze award at the inaugural CRY (Child
Rights and You) Child Rights Champion Award, 'Highly Commended Award'
at the TVE Corporate Sustainability Awards given at BAFTA, London, Gold at
Spikes Asia 2010, a Bronze at Effies 2010 and a Silver at the Effies in 2011. It
also won an Indy’s award in the ‘Community and Social Welfare’ category in
2011 and was awarded ‘Out of the box PR idea’ award at India PR & Corporate
Communications Awards in 2012.