An endowment fund is an investment fund established by a foundation that makes consistent withdrawals from invested capital. The capital in endowment funds, often used by universities, nonprofit organizations, churches and hospitals, is generally utilized for specific needs or to further a company's operating process.

Consider the following points while auditing for endowment policies.

• Ascertain the specific purpose for which the endowment policy is taken, e.g., Sinking Fund policies for redemption of debentures, redemption of leases or policies taken for other similar purposes, etc.
• Verify the terms and conditions of policies and ensure that all such conditions are in force and being followed.
• Check that premium has been deposited in time and the policy is in force.
• Examine that proper disclosures have been made in the financial statements in respect of items for which the policy has been taken.