NAIC / AICPA (E) Working Group
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Joint Executive (EX) / Plenary Committee Summary Report
Summer 2009 Meeting Summaries Index

The NAIC/AICPA (E) Working Group of the Financial Condition (E) Committee met June 14, 2009.

During this meeting, the Working Group:  

• Adopted the minutes from its April 28 conference call, during which the Working Group discussed revisions to the Implementation Guide as a result of questions received about Section 14 of the Annual Financial Reporting Model Regulation (#205), also known as the Model Audit Rule. During the call, the Working Group agreed to expose the proposed revisions for a 30-day public comment period.

• 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 new Statements on Auditing Standards on external confirmations and on quality control that have been exposed for public comment. In addition, the report discussed the newly issued Financial Accounting Standards Board Statement No. 165, Subsequent Events, which replaces guidance previously contained in AU Section 560, Subsequent Events.

• Discussed a survey of the states regarding progress toward adopting the revised Model Audit Rule. Based on the results of the survey, 23 states (Alabama, Connecticut, Delaware, Idaho, Illinois, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New Hampshire, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Virginia, West Virginia, Wisconsin and Wyoming) have adopted the revised requirements. In addition, six other states (California, Indiana, Kansas, Nevada, Pennsylvania and Tennessee) have publicly exposed revised statutes or regulations that incorporate the new requirements. The remaining 22 states plan on adopting the revisions prior to year-end. NAIC staff will continue to update this survey on a quarterly basis, and the results will be discussed at each national meeting.

• Performed the annual review of premium threshold amounts included within the Model Audit Rule, noting that approximately 90.6% of total U.S. direct insurance premiums at Dec. 31, 2008, appear to be subject to either Sarbanes-Oxley reporting requirements or the $500 million threshold requirement in the Model Audit Rule.

• Discussed comments received on proposed changes to the Implementation Guide for the Annual Financial Reporting Model Regulation. Based on comments received, the Working Group agreed to amend the proposed changes to the Implementation Guide by clarifying regulators’ expectations of the parent company’s independent audit committee and its role in overseeing the financial reporting of its insurance legal entities. The amended changes to the Implementation Guide were then adopted by the Working Group.

Action Items:

• Adopted the minutes from the Working Group’s April 28 conference call.

• Adopted changes to the Implementation Guide for the Annual Financial Reporting Model Regulation (#205).