Utah Admin. Code R590-238-5 - Annual Audit
(1) A company shall
have an annual audit by an independent certified public accountant, approved by
the commissioner, and shall file the annual audit report with the commissioner
on or before June 30 for the preceding year.
(2) The annual audit report is part of the
company's annual report of financial condition except for the date by which it
must be filed with the commissioner.
(3) The annual audit report shall include:
(a) an opinion of an independent certified
public accountant that:
(i) includes financial
statements examined by the independent certified public accountant in
accordance with GAAP, as determined by the AICPA;
(ii) covers all years presented;
and
(iii) is on the accountant's
stationery showing the address of issuance, date of issuance, and bearing
original signatures;
(b)
a report of evaluation of internal controls, including:
(i) an evaluation of the methods and
procedures used in the securing of assets and the reliability of the financial
records, including controls of the system of authorization and approval, and
the separation of duties; and
(ii)
a review conducted in accordance with GAAP and filed with the
commissioner;
(c) an
accountant's letter furnished to the company, for inclusion in the filing of
the audited annual report, stating:
(i) that
the accountant is independent from the company and conforms to the standards of
the accountant's profession as contained in the Code of Professional Ethics and
pronouncements of the AICPA and pronouncements of the Financial Accounting
Standards Board;
(ii) the general
background and experience of the staff engaged in the audit, including their
experience in auditing captive or other insurance companies;
(iii) that the accountant understands that
the audited annual report and the accountant's opinions thereon will be filed
in compliance with this rule;
(iv)
that the accountant consents to the requirements of Section
R590-238-9;
(v) that the accountant consents and agrees
to make the work papers available for review by the commissioner, the
commissioner's designee, or the commissioner's appointed agent; and
(vi) that the accountant is properly licensed
by an appropriate state licensing authority;
(d) financial statements, including:
(i) a balance sheet;
(ii) a statement of gain or loss from
operations;
(iii) a statement of
changes in financial position;
(iv)
a statement of cash flow;
(v) a
statement of changes in capital paid up, gross paid in, and contributed surplus
and unassigned funds; and
(vi)
notes to financial statements required by GAAP, including:
(A) a reconciliation of any differences
between the audited financial report and the statement or form filed with the
commissioner;
(B) a summary of
ownership and relationship of the company and all affiliated corporations or
companies insured by the captive; and
(C) a narrative explanation of each material
transaction with the company that involves 3% or more of a company's assets as
of the December 31 next preceding; and
(e) a certification of loss reserves and loss
expense reserves of the company's opining actuary, including:
(i) an actuarial opinion of the
reasonableness of the company's loss reserves and loss expense reserves, unless
waived by the commissioner; and
(ii) a certification by the individual who
certifies the reasonableness of reserves.
(4) The actuary who certifies the
reasonableness of reserves under Subsection (3)(e) shall be:
(a) approved by the commissioner;
(b) a member in good standing of the American
Academy of Actuaries; and
(c) a
fellow or an associate of:
(i) the Casualty
Actuarial Society, for property and casualty companies; or
(ii) the Society of Actuaries, for life and
health companies.
(5) A certification under Subsection (3)(e)
shall be in a form prescribed by the commissioner.
Notes
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