02-031 C.M.R. ch. 235, § 5 - Designation of Independent Certified Public Accountant

A. Each insurer required by this Rule to file an annual audited financial report must file with the Superintendent the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit pursuant to this Rule, together with a letter from the accountant stating that the accountant is aware of the provisions of the insurance code and the regulations of the insurance department of the insurer's state of domicile that relate to accounting and financial matters, and affirming that the accountant will express his or her opinion on the financial statements in terms of their conformity to the statutory accounting practices prescribed or otherwise permitted by that insurance department, specifying such exceptions as he or she may believe appropriate. This information shall be filed within 60 days after the insurer becomes subject to the requirements of this Section.

B. The insurer shall have a written contract with the accountant. The terms of engagement shall include a commitment by the accountant to comply with the requirements to evaluate the insurer's internal controls pursuant to generally accepted auditing standards, to notify the insurer and the appropriate regulatory authorities of impaired or misstated financial condition, and to retain work papers and audit communications and make them available for regulatory inspection at the request of the Superintendent pursuant to Section 12 of this Rule.

C. If the currently designated accountant or the accountant designated for the most recently filed audited financial report is dismissed or resigns, the insurer shall notify the Superintendent within five business days. Within ten business days thereafter, the insurer shall also furnish the Superintendent with a separate letter stating whether there were any disagreements in the preceding 24 months with the former designated accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of the former designated accountant would have caused him or her to make reference to the subject matter of the disagreement in connection with his or her opinion. Such disagreements must be reported whether or not they were resolved to the former designated accountant's satisfaction. The reporting requirement of this Section applies to disagreements at the decision-making level;i.e., between personnel of the insurer responsible for presentation of its financial statements and personnel of the accounting firm responsible for rendering its report. The insurer shall also make a written request to the former designated accountant to furnish a letter addressed to the insurer stating whether the accountant agrees with the statements contained in the insurer's letter and, if not, stating the reasons for which he or she does not agree; and the insurer shall furnish the responsive letter from the former designated accountant to the Superintendent together with its own.

Notes

02-031 C.M.R. ch. 235, § 5