NAIC/AICPA (E) Working Group
March 30, 2008

The NAIC/AICPA Working Group of the Financial Condition (E) Committee met on Sunday, March 30, 2008.

During this meeting, the Working Group:

• Adopted minutes from its March 4, 2008 conference call, which discussed a referral received from the Statutory Accounting Principles Working Group on GAAP disclosures required when reporting on statutory financial statements.

• Received a report from the American Institute of Certified Public Accountants (AICPA) regarding projects that affect state insurance regulators and the insurance industry. The AICPA report discussed the status of FASB Staff Position 07-1-1: Deferral of AICPA Statement of Position 07-1 .

• Discussed a survey of the states regarding their progress of adopting the revised Model Audit Rule requirements. Based on the results of the survey, two states ( Virginia & Alabama) have adopted the revised requirements. In addition, two other states (Connecticut & South Carolina) have publicly exposed revised regulations that incorporate the new requirements. Of the remaining states, 17 plan to adopt the revisions in 2008 and the remaining 30 states plan on adopting the revisions in 2009. It should be noted that the effective date of the revisions will not be until 2010. NAIC staff will continue to update this survey on a quarterly basis, and the results will be discussed at each of the National Meetings.

• Received comments from interested parties requesting that information from the Model Audit Rule adoption survey be released publicly.

• Discussed CPA use of indemnification clauses in audit engagement letters and adopted a referral to the Financial Examiners Handbook Technical Group to add guidance to the examiners handbook on testing audit engagement letters for these clauses.

• Adopted a recommendations memo to send to the Audit Issues Task Force of the AICPA related to its guidance on GAAP disclosures required when reporting on statutory financial statements.

Action Items:

• Adopted interim meeting minutes.

• Adopted a referral to the Financial Examiners Handbook Technical Group on indemnification clauses in audit engagement letters.

• Adopted a recommendations letter to send to the Audit Issues Task Force of the AICPA of the AICPA related to its guidance on GAAP disclosures required when reporting on statutory financial statements.