Current through Register Vol. 60, No. 12, December 1, 2021
Authority shall not recognize any person as a qualified independent certified
public accountant for the purposes of OAR 410-141-5020 if the person:
(a) Is not in good standing with the AICPA
and in all states in which the person is licensed to practice as a certified
public accountant; or
either directly or indirectly entered into an agreement of indemnity or a
release from liability (collectively referred to as indemnification) with
respect to the audit of the CCO.
(2) Except as otherwise provided in this
section, the Authority shall recognize an independent certified public
accountant as qualified as long as the certified public accountant conforms to
the standards of the certified public accountant profession, as contained in
the Code of Professional Ethics of the AICPA and the rules and the Code of
Professional Conduct of the Oregon State Board of Accountancy, or a similar
code of conduct of the state board regulating the practice of accountancy in
the state in which the accountant is licensed to practice.
(3) A qualified independent certified public
accountant may enter into an agreement with a CCO to have disputes relating to
an audit resolved by mediation or arbitration. In the event of a delinquency
proceeding commenced against the CCO, however, the mediation or arbitration
provisions shall operate at the option of the statutory successor.
The lead or coordinating audit partner
having primary responsibility for the audit may not act in that capacity for
more than five consecutive years, beginning with the year 2020. The partner or
other person is disqualified from acting in that or a similar capacity for the
same CCO or its subsidiaries or affiliates for a period of five consecutive
years. A CCO may apply to the Authority for relief from the rotation
requirement of this section on the basis of unusual circumstances. A CCO must
apply for relief at least 30 days before the end of the calendar year. The
Authority may consider the following factors in determining whether the relief
should be granted:
(a) The number of partners,
the expertise of the partners or the number of CCO and insurance clients in the
currently registered firm.
capitated revenue volume of the CCO.
(c) The number of jurisdictions in which the
CCO transacts business.
The Authority shall not recognize an
individual as an independent certified public accountant, or accept an annual
audited financial report required by OAR 410-141-5020 that is prepared in whole
or part by an individual, if the individual:
Has been convicted of fraud, bribery, a
violation of the Racketeer Influenced and Corrupt Organizations Act, 18
, or any dishonest conduct or practices under federal or
(b) Has been found to
have violated the laws of this state with respect to any previous reports
submitted under OAR 410-141-5020 or to DCBS; or
(c) Has demonstrated a pattern or practice of
failing to detect or disclose material information in any report filed under
OAR 410-141-5020 or to DCBS.
(6) The Authority may hold a hearing to
determine whether an independent certified public accountant is qualified and,
considering the evidence presented, may rule that the accountant is not
qualified for purposes of expressing the accountant's opinion on the financial
statements in the annual audited financial report made pursuant to OAR
410-141-5020 and require the CCO to replace the accountant with another
accountant who is qualified with respect to the CCO as provided in this
The Authority may not
recognize an accountant as a qualified independent certified public accountant
or accept an annual audited financial report prepared in whole or in part by
the accountant if the accountant provides to a CCO, contemporaneously with the
audit, any of the following non-audit services:
(a) Bookkeeping or other services related to
the accounting records or financial statements of the CCO.
(b) Financial information systems design and
(c) Appraisal or
valuation services, fairness opinions, or contribution-in-kind
advisory services involving the determination of amounts recorded in the
financial statements. The accountant may assist a CCO in understanding the
methods, assumptions and inputs used in the determination of amounts recorded
in the financial statement only if it is reasonable to conclude that the
services provided will not be subject to audit procedures during an audit of
the CCO's financial statements. An accountant's actuary may also issue an
actuarial opinion or certification on a CCO's reserves if all of the following
conditions have been met:
(A) Neither the
accountant nor the accountant's actuary has performed any management functions
or made any management decisions.
(B) The CCO has competent personnel (or
engages a third-party actuary) to estimate the reserves for which management
accountant's actuary tests the reasonableness of the reserves after the CCO's
management has determined the amount of the reserves.
(e) Internal audit outsourcing
(f) Management functions
or human resources.
(g) Broker or
dealer, investment adviser or investment banking services.
(h) Legal services or expert services
unrelated to the audit.
(8) In general, the principles of
independence with respect to services provided by a qualified independent
certified public accountant are largely predicated on three basic principles,
violations of which would impair the accountant's independence. The principles
are that the accountant cannot function in the role of management, cannot audit
the accountant's own work, and cannot serve in an advocacy role for the
(9) A qualified independent
certified public accountant who performs the audit may engage in other
non-audit services, including tax services, that are not described in
subsection (7) and that do not conflict with subsection (8), only if the
activity is approved in advance by the CCO's audit committee in accordance with
services and non-audit services provided to a CCO by a qualified independent
certified public accountant of the CCO shall be preapproved by a duly
constituted audit committee of the CCO's Board. The preapproval requirement is
waived with respect to non-audit services if all of the following conditions
(a) The aggregate amount of all such
non-audit services provided to the CCO constitutes not more than five percent
of the total amount of fees paid by the CCO to its qualified independent
certified public accountant during the fiscal year in which the non-audit
services are provided.
services were not recognized by the CCO at the time of the engagement to be
services are promptly brought to the attention of the audit committee and
approved prior to the completion of the audit by the audit committee.
(11) The Authority may not
recognize an independent certified public accountant as qualified for a
particular CCO if a member of the board, president, chief executive officer,
controller, chief financial officer, chief accounting officer or any person
serving in an equivalent position for that CCO was employed by the independent
certified public accountant and participated in the audit of that CCO during
the one-year period preceding the date that the most current statutory opinion
is due. This section applies only to partners and senior managers involved in
the audit. A CCO may apply to the Authority for relief from the requirement of
this subsection on the basis of unusual circumstances.