Utah Admin. Code R590-238-6 - Annual Audit
(1) All companies
shall have an annual audit by an independent certified public accountant,
approved by the commissioner, and shall file such audited financial report with
the commissioner on or before June 30 for the preceding year. Financial
statements furnished under this section shall be prepared in accordance with
generally accepted auditing standards as determined by the American Institute
of Certified Public Accountants ("AICPA").
(2) The annual audit report shall be
considered part of the company 's annual report of financial condition except
with respect to the date by which it must be filed with the commissioner.
(3) The annual audit shall consist
of the following:
(a) Opinion of Independent
Certified Public Accountant
(i) Financial
statements furnished pursuant to this section shall be examined by independent
certified public accountants in accordance with generally accepted auditing
standards as determined by the AICPA.
(ii) The opinion of the independent certified
public accountant shall cover all years presented.
(iii) The opinion shall be addressed to the
company on stationery of the accountant showing the address of issuance, shall
bear original manual signatures and shall be dated.
(b) Report of Evaluation of Internal Controls
(i) This report shall include an evaluation
of the internal controls of the company relating to the methods and procedures
used in the securing of assets and the reliability of the financial records,
including but not limited to, controls as the system of authorization and
approval and the separation of duties.
(ii) The review shall be conducted in
accordance with generally accepted auditing standards and the report shall be
filed with the commissioner.
(c) Accountant's Letter
The accountant shall furnish the
(i) that he is independent with respect to
the company and conforms to the standards of his 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 his opinions thereon will be filed in compliance
with this rule.
(iv) that the
accountant consents to the requirements of
R590-238-10;
(v) that the accountant consents
and agrees to make the work papers as defined in
R590-238-3(3)
available for review by the commissioner, his designee or his appointed agent;
and
(vi) that the accountant is
properly licensed by an appropriate state licensing authority.
(d) Financial Statements
(i) The financial statements required shall
be as follows:
(A) balance sheet;
(B) statement of gain or loss from
operations;
(C) statement of
changes in financial position;
(D)
statement of cash flow;
(E)
statement of changes in capital paid up, gross paid in and contributed surplus
and unassigned funds (surplus); and
(F) notes to financial statements.
(ii) The notes to financial
statements shall be those required by GAAP and shall include:
(A) a reconciliation of differences, if any,
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 all material
transactions with the company . For purposes of this provision, no transaction
shall be deemed material unless it involves 3% or more of a company 's admitted
assets as of the December 31 next preceding.
(e) Certification of Loss Reserves and Loss
Expense Reserves of the company 's opining actuary
(i) The annual audit shall include an
actuarial opinion as to the reasonableness of the company 's loss reserves and
loss expense reserves, unless waived by the commissioner.
(ii) The individual who certifies as to the
reasonableness of reserves shall be approved by the Commissioner and shall be a
Fellow or Associate of the Casualty Actuarial Society and a member in good
standing of the American Academy of Actuaries, for property and casualty
companies or a Fellow or Associate of the Society of Actuaries and a member in
good standing of the American Academy of Actuaries for life and health
companies.
(4) Certification under Subsection
R590-238-6(3)(e) shall be in such form as the commissioner deems appropriate.
Notes
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