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 company, for inclusion in the filing of the audited annual report, a letter stating:

(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

Utah Admin. Code R590-238-6
Amended by Utah State Bulletin Number 2015-20, effective 9/25/2015

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