guide to - compliance

GUIDE

COMPLIANCE

WITH STATE AUDIT

REQUIREMENTS

Annual Financial Reporting Model Regulation No. 205

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NAIC Guide to Compliance

with State Audit Requirements

2021

(last updated 1/9/2024)

NAIC Guide to Compliance

STATE AUDIT REQUIREMENTS

The NAIC has prepared this publication to assist insurers, certified public accountants, and other interested parties

in complying with various state filing requirements for annual audited financial reports. These filing requirements

generally provide for, among other things, specific information concerning the filing and content of audited

financial reports and other related letters and reports with the state insurance department. All of the guidelines in

this area have recently been significantly changed and this publication has been created to summarize these new

requirements.

On June 11, 2006, the NAIC membership voted to approve amendments to the Annual Financial Reporting Model

Regulation (#205), commonly known as the Model Audit Rule. The purpose of this regulation is to improve a

state’s surveillance of the financial condition of insurers by requiring an independent annual audit of the financial

statements by Certified Public Accountants. Significant elements of this regulation are required as an

accreditation standard and have been since the creation of the standards. The amendments adopted in 2006 were

the result of nearly three years of continued research and discussion by financial regulators, members of industry,

public accountants and representatives from trade associations. The revisions deal with primarily three areas:

auditor independence, corporate governance and internal control over financial reporting. In 2014, the NAIC

membership continued to refine effective financial surveillance and voted to approve a new provision relating to

the establishment and maintenance of on internal audit function.

The critical new requirements associated with the 2006 and 2014 revisions have now been adopted by virtually

all member states. Citations for each state’s statute or regulation containing the relevant provisions have been

provided within the publication. The publication summarizes requirements placed on insurers and their external

auditors by the Model Audit Rule and compares and contrasts the requirements included within the NAIC Model

to those ultimately adopted by each NAIC member state.

The summaries contained herein are not intended to be all-inclusive and should not be relied on solely in

determining state-specific requirements. Where a question exists with respect to any requirement, the state’s

statute or regulation should be reviewed and, where necessary, the state insurance department should be contacted.

Every effort has been made to ensure the contents of this publication are complete and factually correct, but the

NAIC makes no warranty as to the completeness or correctness of the information provided. All responsibility

for compliance with individual state insurance codes rests solely with the insurance company and its independent

auditor.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALABAMA

ALA. ADMIN. CODE R.

482-1-141.01 to 482-1-141.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

Between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALABAMA

ALA. ADMIN. CODE R.

482-1-141.01 to 482-1-141.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALABAMA

ALA. ADMIN. CODE R.

482-1-141.01 to 482-1-141.20

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication

should still be filed and so state. If unremediated material weaknesses are noted, the

insurer is also required to provide a description of remedial actions to be taken with the

filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALASKA

ALASKA ADMIN. CODE TIT.

3 §§ 21.700 to 21.799

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Allowed for insurers having direct

premiums of < $1,000,000 and <

1,000 policyholders nationwide,

unless reinsurance premiums

assumed exceed $1,000,000.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums

assumed exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group

of individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed

premiums between $300 million and $500 million shall have a minimum of 50% of its

members qualify as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALASKA

ALASKA ADMIN. CODE TIT.

3 §§ 21.700 to 21.799

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non- audit services. Insurers having direct written and assumed premiums of less than

$100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm and

acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer may

make an application to the commissioner for relief from the requirement on the basis of unusual

circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators. See also § 21.36.060

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the filing

of this report if the insurer is in any RBC level event or meets any one or more of the standards

of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ALASKA

ALASKA ADMIN. CODE TIT.

3 §§ 21.700 to 21.79

FILING DEADLINES

Audit Report

No provision

June 1. The commissioner may require an insurer to file an Audited financial report earlier than

June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

See also § 21.09.200

CPA must notify insurer within five business days; insurer shall notify Commissioner within five

business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule,

except specifies 30 days prior to

issuance of statutory audit report.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARIZONA

§ 20-698 – Does not provide

comprehensive language but rather

requires compliance with NAIC

model audit rule.

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARIZONA

§ 20-698 – Does not provide

comprehensive language but rather

requires compliance with NAIC

model audit rule.

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARIZONA

§ 20-698 – Does not provide

comprehensive language but rather

requires compliance with NAIC

model audit rule.

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARKANSAS

Ins. Reg. 25 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARKANSAS

Ins. Reg. 25 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm and

acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer may

make an application to the commissioner for relief from the requirement on the basis of unusual

circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ARKANSAS

Ins. Reg. 25 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CALIFORNIA

10 CA ADC §§ 2309.2 to 2309.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All insurers doing business in

California subject to ICS 900.2

requirements.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report

of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CALIFORNIA

10 CA ADC §§ 2309.2 to 2309.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non-audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC (CA has adopted

the NAIC model language.)

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CALIFORNIA

10 CA ADC §§ 2309.2 to 2309.20 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is

also required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

COLORADO

Ins. Reg. 3-1-4 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

COLORADO

Ins. Reg. 3-1-4 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting. Holding

companies may meet this requirement at the ultimate controlling parent level, intermediate

holding company level or individual legal entity level. Exemption for insurers with annual

premium under $500,000,000 or, if insurance group, annual premium under $1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed premiums

of less than $100,000,000 in any calendar year may request and exemption from this

requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

COLORADO

Ins. Reg. 3-1-4 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier than

June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide a

description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CONNECTICUT

CT ADC § 38a.54 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CONNECTICUT

CT ADC § 38a.54 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

CONNECTICUT

CT ADC § 38a.54 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier than

June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DELAWARE

18 DE ADC § 301 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DELAWARE

18 DE ADC § 301 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DELAWARE

18 DE ADC § 301 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DISTRICT OF

COLUMBIA

DC Code §§ 31-301 to 31-314 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule

except no reference to

Management’s Report.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DISTRICT OF

COLUMBIA

DC Code §§ 31-301 to 31-314 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm and

acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer may

make an application to the commissioner for relief from the requirement on the basis of unusual

circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

DISTRICT OF

COLUMBIA

DC Code §§ 31-301 to 31-314 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

FLORIDA

69O-137.002 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule

except Management’s report of

Internal Control over Financial

Reporting is not mentioned.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule

except 7-year rotation period with

2- year cool-down.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule

except specifies no less than seven

years.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

FLORIDA

69O-137.002 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule

except no provision for relief.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

FLORIDA

69O-137.002 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

No provision.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule

except no requirement to file with

states or NAIC.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

None

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

None

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

None

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

GEORGIA

GA ADC § 120-2-60 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule

except no reference to

Management’s Report.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

GEORGIA

GA ADC § 120-2-60 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

GEORGIA

GA ADC § 120-2-60 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

HAWAII

Hawaii Revised Statutes

§ 431:3-302.5 and Hawaii

Administrative Rules § 16- 185

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All domestic insurers.

All licensed or authorized insurers.

Size Exemptions

Exemption based on financial or

organizational hardship.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

HAWAII

Hawaii Revised Statutes

§ 431:3-302.5 and Hawaii

Administrative Rules § 16- 185

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

HAWAII

Hawaii Revised Statutes

§ 431:3-302.5 and Hawaii

Administrative Rules § 16- 185

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IDAHO

ID ADC 18.07.04.000 to

18.07.04.026

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IDAHO

ID ADC 18.07.04.000 to

18.07.04.026

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm and

acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer may

make an application to the commissioner for relief from the requirement on the basis of unusual

circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IDAHO

ID ADC 18.07.04.000 to

18.07.04.026

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ILLINOIS

50 Ill. Adm. Code 925.20 to

Exhibit A

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

No size exemption specified

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ILLINOIS

50 Ill. Adm. Code 925.20 to

Exhibit A

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm and

acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer may

make an application to the commissioner for relief from the requirement on the basis of unusual

circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

ILLINOIS

50 Ill. Adm. Code 925.20 to

Exhibit A

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer shall also notify Director

within 30 days of engaging new

auditor.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

INDIANA

760 IAC 1-78-1 to 1-78-18 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule

except that the partner rotation has a

7-year limitation with a 2-year cool-

down period.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

INDIANA

760 IAC 1-78-1 to 1-78-18 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non-audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

INDIANA

760 IAC 1-78-1 to 1-78-18 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier than

June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is

also required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee

Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IOWA

IAC 191-98.1(505) to

191-98.20(505); IAC 191-5.25

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IOWA

IAC 191-98.1(505) to

191-98.20(505); IAC 191-5.25

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non-audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

IOWA

IAC 191-98.1(505) to

191-98.20(505); IAC 191-5.25

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier than

June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is

also required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KANSAS

KAN. ADMIN. REG. § 40-1-37 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Every insurer defined in Section 3 of

“Policy and Procedure Requiring

Annual audited Financial Reports”

November 30, 2016

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KANSAS

KAN. ADMIN. REG. § 40-1-37 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KANSAS

KAN. ADMIN. REG. § 40-1-37 FILING DEADLINES)

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

The CPA need only file once prior to

the first audit, however, a change in

auditors would necessitate a new

awareness letter – per Department

ruling.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KENTUCKY

806 KY. ADMIN. REGS. 3:170;

KY. REV. STAT. ANN. 304.3-180

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KENTUCKY

806 KY. ADMIN. REGS. 3:170;

KY. REV. STAT. ANN. 304.3-180

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Does not include exemption.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

KENTUCKY

806 KY. ADMIN. REGS. 3:170;

KY. REV. STAT. ANN. 304.3-180

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

LOUISIANA

La. Admin. Code

tit. 37 § 13701 to 13739

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

LOUISIANA

La. Admin. Code

tit. 37 § 13701 to 13739

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

LOUISIANA

La. Admin. Code

tit. 37 § 13701 to 13739

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MAINE

02-031 CMR Ch. 235, § 1 to 19;

24-A M.R.S.A. § 221-A

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers, HMOs, and

nonprofit health plans.

All licensed or authorized insurers.

Size Exemptions

Nationwide written premium plus

reinsurance assumed less than

$1,000,000, provided that

outstanding loss reserves are less

than $1,000,000.

Assessment fire insurers.

Allowed for insurers having direct premiums of < $1,000,000 in any calendar year and <

1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption

Substantially similar to NAIC

Model Audit Rule but must file

if requested by Superintendent.

Allowed if audited reports required by the domiciliary state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Retained for a minimum of six years.

Extended to seven years if Report of

Examination is still outstanding after

six years.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MAINE

02-031 CMR Ch. 235, § 1 to 19;

24-A M.R.S.A. § 221-A

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MAINE

02-031 CMR Ch. 235, § 1 to 19;

24-A M.R.S.A. § 221-A

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MAINE

02-031 CMR Ch. 235, § 1 to 19;

24-A M.R.S.A. § 221-A

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days’ advance notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

At same time as designation of

auditor.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

June 1.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Filing with NAIC, same as in

Model Audit Rule. Additional filing

with other states, only if required

by their law.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

When required, report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MARYLAND

COMAR 31.05.11.01 to

31.05.11.17

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MARYLAND

COMAR 31.05.11.01 to

31.05.11.17

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit

Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required

Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MARYLAND

COMAR 31.05.11.01 to

31.05.11.17

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MASSACHUSETTS

211 CMR 26.01 to 26.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

Applicability

All insurers

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MASSACHUSETTS

211 CMR 26.01 to 26.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Same as NAIC Model Audit Rule

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MASSACHUSETTS

211 CMR 26.01 to 26.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MASSACHUSETTS

211 CMR 26.01 to 26.20 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MICHIGAN

MCL 500.1001 to 500.1033 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Insurers having direct premiums

written in Michigan of

< $1,000,000 in any year and

< 1,000 policyholders in the State

of Michigan. In addition, see

§ 500.1003 for further size

exemption.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule

except that the submission of a

Qualification Letter is not

addressed.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report

of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Retained for a period of not less than

five years after period reported on.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MICHIGAN

MCL 500.1001 to 500.1033 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non-audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MICHIGAN

MCL 500.1001 to 500.1033 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MICHIGAN

MCL 500.1001 to 500.1033 FILING DEADLINES

Audit Report

Same as NAIC Model Audit

Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is

also required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MINNESOTA

M.S.A. § 60A.1291 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All insurers doing business in the

State of Minnesota.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MINNESOTA

M.S.A. § 60A.1291 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MINNESOTA

M.S.A. § 60A.1291 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee

Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSISSIPPI

Miss. Code Ann. §§ 83-5-101 to

83-5-125

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Commissioner may grant

exemption from compliance, if the

commissioner finds, upon review of

the application that compliance

would constitute a financial or

organizational hardship upon the

insurer.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSISSIPPI

Miss. Code Ann. §§ 83-5-101 to

83-5-125

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule

except no provision for petitioning

for relief from this provision

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSISSIPPI

Miss. Code Ann. §§ 83-5-101 to

83-5-125

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit

Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSISSIPPI

Miss. Code Ann. §§ 83-5-101 to

83-5-125

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule

except no NAIC reference.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule

except no NAIC reference.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSOURI

V.A.M.S. 375.1025 to 375.1062 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All certified or authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule,

except that the submission of a

CPA Qualification Letter is not

addressed.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report

of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSOURI

V.A.M.S. 375.1025 to 375.1062 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non-audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MISSOURI

V.A.M.S. 375.1025 to 375.1062 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report

earlier than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication

should still be filed and so state. If unremediated material weaknesses are noted, the

insurer is also required to provide a description of remedial actions to be taken with the

filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MONTANA

ARM 6.6.3501 to 6.6.3521 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven

years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MONTANA

ARM 6.6.3501 to 6.6.3521 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more

of the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

MONTANA

ARM 6.6.3501 to 6.6.3521 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEBRASKA

210 Neb. Admin. Code

§§ 56-001 to 56-019

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report

of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven

years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed

premiums greater than $500 million shall have a minimum of 75% of its members qualify

as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEBRASKA

210 Neb. Admin. Code

§§ 56-001 to 56-019

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more

of the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEBRASKA

210 Neb. Admin. Code

§§ 56-001 to 56-019

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEVADA

Nev. Admin. Code §§ 680A.172 to

680A.211

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Allowed for insurers having direct

premiums of < $1,000,000 and <

1,000 policyholders nationwide,

unless reinsurance premiums

assumed exceed $1,000,000.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEVADA

Nev. Admin. Code §§ 680A.172 to

680A.211

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEVADA

Nev. Admin. Code §§ 680A.172 to

680A.211

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW

HAMPSHIRE

N.H. ADMIN. R. INS.

§§ 4501.01 to 4501.17

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed

premiums greater than $500 million shall have a minimum of 75% of its members qualify

as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW

HAMPSHIRE

N.H. ADMIN. R. INS.

§§ 4501.01 to 4501.17

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more of

the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW

HAMPSHIRE

N.H. ADMIN. R. INS.

§§ 4501.01 to 4501.17

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is

also required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief

from Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit

report and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW JERSEY

N.J. Admin. Code §§ 11:2-26.1 to

11:2-26.21

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Allowed if audited reports are

deemed substantially similar and

audit report is filed with

Commissioner along with other

required reports.

Allowed if audited reports required by the domestic state are deemed substantially

similar and Audited financial reports, Communication of Internal Control Related

Matters Noted in an Audit, Qualification Letter, Notification of Adverse Condition, and

Management’s Report of Internal Control over Financial Reporting are filed within the

time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

The insurer shall require that

accountant retain until Report of

Examination covering period of

audit is issued, but no longer than 7

years.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW JERSEY

N.J. Admin. Code §§ 11:2-26.1 to

11:2-26.21

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Some provisions same as NAIC

Model Audit Rule. However, New

Jersey rule does not contain similar

premium thresholds.

Audit committee requirements do

not apply to a domestic insurer if

the person controlling the insurer is

an entity having a BOD and

committees that substantially meet

the requirements. The board of

directors shall establish one or more

committees, including an audit

committee comprised solely of

directors who are not officers,

employees of the insurer or any

related entity, or under common

control or owners of a controlling

interest of any such entity.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members

qualify as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

Not recognized if key person

participated in the audit of the

insurer during the one yr. period

preceding the due date of the

current statutory opinion.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW JERSEY

N.J. Admin. Code §§ 11:2-26.1 to

11:2-26.21

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Standards are specifically listed.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more

of the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with

an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW JERSEY

N.J. Admin. Code §§ 11:2-26.1 to

11:2-26.21

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted

in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief

from Partner Rotation

Requirements

Same as NAIC Model Audit Rule

except upon notice of not being

qualified as an independent CPA,

the insurer may within 20 days

request review.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states

it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

The BOD shall establish a

committee of entirely independent

members.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

NEW MEXICO

N.M. CODE R. §§ 13.2.5.2 to

13.5.2.27

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Partner limited to five consecutive

years after which he/she cannot act

in that capacity for two years.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

100

NEW MEXICO

N.M. CODE R. §§ 13.2.5.2 to

13.5.2.27

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed premiums

of less than $100,000,000 in any calendar year may request and exemption from this

requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

No specific provision.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

101

NEW MEXICO

N.M. CODE R. §§ 13.2.5.2 to

13.5.2.27

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

No report should be issued if the

accountant does not identify

unremediated material weaknesses.

13.2.5.21

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication

should still be filed and so state. If unremediated material weaknesses are noted, the

insurer is also required to provide a description of remedial actions to be taken with the

filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief

from Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

102

NEW YORK

N.Y. COMP. CODES R. & REGS.

tit. 11 §§ 89.0 to 89.16

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Insurers, fraternal benefit societies

and managed care organizations.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report

of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

For six calendar years from the date

of the audit report or until the filing

of the report on examination

covering the period of the audit,

whichever is longer.

Retained until Report of Examination covering period is issued, but no longer than seven years.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

103

NEW YORK

N.Y. COMP. CODES R. & REGS.

tit. 11 §§ 89.0 to 89.16

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Does not apply to a domestic life

insurer subject to Insurance Law

1202(b)(2); a foreign or alien

insurer not entered into this state

through a U.S. branch; or a

company that is a SOX compliant

entity or a wholly- owned subsidiary

of a SOX compliant entity.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

104

NEW YORK

N.Y. COMP. CODES R. & REGS.

tit. 11 §§ 89.0 to 89.16

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Management’s Report of

Internal Controls over

Financial Reporting

Contains provisions similar to the as

NAIC Model Audit Rule. Does not

contain provision regarding RBC

level.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more

of the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

105

NEW YORK

N.Y. COMP. CODES R. & REGS.

tit. 11 §§ 89.0 to 89.16

FILING DEADLINES

Audit Report

Audited financial reports shall be

filed on or before May 31; on or

before April 1 for MCOs. See N.Y.

COMP. CODES R. & REGS. tit.

11 § 89.2 for locations to submit

filings.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

March 1, 2010 and updated

information within 60 days of any

change thereafter.

Within 60 days after becoming subject to regulation.

Qualification Letter

No provision.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted

in an Audit

Shall submit report to the

superintendent as part of filing of

the

annual audited financial report.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Shall be required to report, in

writing, to the superintendent, the

board of directors and the

company’s audit committee within

5 days.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

106

NEW YORK

N.Y. COMP. CODES R. & REGS.

tit. 11 §§ 89.0 to 89.16

FILING DEADLINES

Audit Committee Election

Shall give notice of the

election of its audit committee

within 30 days of the effective

date of this provision

(provisions apply beginning

with the reporting period

ending December 31, 2010)

and within 30 days of any

change in membership of the

audit committee.

Notification of the election shall be made prior to the issuance of the statutory audit

report and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Shall be filed with the audited

financial report.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

107

NORTH

CAROLINA

N.C. GEN. STAT.

§§ 58-10-185 to 58-10-265

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing

to designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

108

NORTH

CAROLINA

N.C. GEN. STAT.

§§ 58-10-185 to 58-10-265

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed premiums

of less than $100,000,000 in any calendar year may request and exemption from this

requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

109

NORTH

CAROLINA

N.C. GEN. STAT.

§§ 58-10-185 to 58-10-265

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication

should still be filed and so state. If unremediated material weaknesses are noted, the

insurer is also required to provide a description of remedial actions to be taken with the

filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

110

NORTH DAKOTA

N.D. Admin. Code Chapter

45-03- 20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers other than those

licensed exclusively in North

Dakota.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing

to designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

111

NORTH DAKOTA

N.D. Admin. Code Chapter

45-03- 20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed premiums

of less than $100,000,000 in any calendar year may request and exemption from this

requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An

insurer may make an application to the commissioner for relief from the requirement on the

basis of unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

112

NORTH DAKOTA

N.D. Admin. Code Chapter

45-03- 20

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication

should still be filed and so state. If unremediated material weaknesses are noted, the

insurer is also required to provide a description of remedial actions to be taken with the

filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief

from Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its

annual statement filing the approval for relief with the states that it is licensed or doing

business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

113

OHIO

OH ADC 3901-1-50 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing

to designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

114

OHIO

OH ADC 3901-1-50 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed premiums

of less than $100,000,000 in any calendar year may request and exemption from this

requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

115

OHIO

OH ADC 3901-1-50 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit

report and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

116

OKLAHOMA

tit. 36 §§ 311A.1-311A.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed

premiums greater than $500 million shall have a minimum of 75% of its members qualify

as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

117

OKLAHOMA

tit. 36 §§ 311A.1-311A.20 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule

except contains a waiver.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare

a report.

If an insurer does not exceed the premium threshold, the commissioner may still require

the filing of this report if the insurer is in any RBC level event or meets any one or more of

the standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

118

OKLAHOMA

tit. 36 §§ 311A.1-311A.20 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Department policy to require current letter.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief

from Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit

report and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

119

OREGON

OR. ADMIN. R. 836-011-0100

to 836-011-0235

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed

premiums greater than $500 million shall have a minimum of 75% of its members qualify

as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

120

OREGON

OR. ADMIN. R. 836-011-0100

to 836-011-0235

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

121

OREGON

OR. ADMIN. R. 836-011-0100

to 836-011-0235

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

122

PENNSYLVANIA

31 PA CODE 147.1 to 147.15 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule

except that domestic insurers must

have total admitted assets of less

than $10,000,000. 147.13.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Foreign insurers exempt on basis

of substantially similar

requirements. 147.13

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule;

except that requires retention for at

least 7 years after period reported on

in audit report.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

123

PENNSYLVANIA

31 PA CODE 147.1 to 147.15 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule;

with the exception of broader scope

for prohibited actuarial advisory

services.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

124

PENNSYLVANIA

31 PA CODE 147.1 to 147.15 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

No language requiring

communication of deficiencies to be

reported even if no deficiencies

noted.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Except that it states no later than

April 1 of the year filed.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

125

PUERTO RICO

RULE 14-A ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Insurers having premiums less than

$100,000 in any year or less than

1,000 policyholders.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

No provision.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

No provision.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Not less than 5 years after period

covered in report.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

No provision.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

126

PUERTO RICO

RULE 14-A ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

No provision.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

No provision.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

No provision.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

No provision.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

No provision.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over statutory

financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

127

PUERTO RICO

RULE 14-A FILING DEADLINES

Audit Report

Shall file on or before June 30.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Within 30 days.

Within 60 days after becoming subject to regulation.

Qualification Letter

Shall be filed with annual audited

report.

June 1.

Awareness Letter

No provision.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

No provision.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Insurer shall notify Commissioner

within 5 days; no requirement for

CPA.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

No provision.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

No provision.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

No provision.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

No provision.

Notification of the election shall be made prior to the issuance of the statutory audit

report and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

No provision.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

128

RHODE ISLAND

230-RICR- 20-45-7.1 to

230-RICR- 20-45-7.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

129

RHODE ISLAND

230-RICR- 20-45-7.1 to

230-RICR- 20-45-7.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

130

RHODE ISLAND

230-RICR- 20-45-7.1 to

230-RICR- 20-45-7.20

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

131

SOUTH

CAROLINA

Regulation 69-70 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers. S.C. Code Ann. Regs. 69 -70 (2009).

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

132

SOUTH

CAROLINA

Regulation 69-70 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

133

SOUTH

CAROLINA

Regulation 69-70 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

134

SOUTH DAKOTA

S.D. Codified Laws § 58-43-1 to

58-43-26

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

135

SOUTH DAKOTA

S.D. Codified Laws § 58-43-1 to

58-43-26

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

136

SOUTH DAKOTA

S.D. Codified Laws § 58-43-1 to

58-43-26

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

137

TENNESSEE

Reg. ch. 0780-01-65-.01 to

0780-01-65-.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums

assumed exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar and

Audited financial reports, Communication of Internal Control Related Matters Noted in an

Audit, Qualification Letter, Notification of Adverse Condition, and Management’s Report of

Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation

requirement on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group

of individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed

premiums between $300 million and $500 million shall have a minimum of 50% of its

members qualify as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

138

TENNESSEE

Reg. ch. 0780-01-65-.01 to

0780-01-65-.20

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who provides

prohibited non- audit services. Insurers having direct written and assumed premiums of less

than $100,000,000 in any calendar year may request and exemption from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

139

TENNESSEE

Reg. ch. 0780-01-65-.01 to

0780-01-65-.20

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should

still be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it is

licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report and

the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

140

TEXAS

28 Tex. Admin. Code § 7.88 (2010) ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule,

except no 1,000 policyholders

reference.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

141

TEXAS

28 Tex. Admin. Code § 7.88 (2010) ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

142

TEXAS

28 Tex. Admin. Code § 7.88 (2010) FILING DEADLINES

Audit Report

June 1 for multi-state insurers and

June 30 for Texas-only writers.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

No provision

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Not later than Dec. 31 (filed with

Designation of Auditor letter).

Required annually pursuant to TX INS § 401.014

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Separately maintained at TX INS

§ 401.017; shall notify

Commissioner within 10 days of

notification.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Separately maintained at TX INS

§ 401.015.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule

The application for relief from partner rotation requirements must be made at least 30 days before

the end of the calendar year. If approval is granted, the insurer shall file with its annual statement

filing the approval for relief with the states that it is licensed or doing business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

143

UTAH

Utah Admin. Code

R. 590-254-1 to 590-254-21

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All authorized insurers.

All licensed or authorized insurers.

Size Exemptions

Allowed for insurers having

direct premiums of < $1,000,000

and < 1,000 policyholders

nationwide, unless reinsurance

premiums assumed exceed

$1,000,000.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

144

UTAH

Utah Admin. Code

R. 590-254-1 to 590-254-21

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

No provision.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

145

UTAH

Utah Admin. Code

R. 590-254-1 to 590-254-21

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial statements;

if no unremediated material weaknesses are noted, the communication should still be filed and

so state. If unremediated material weaknesses are noted, the insurer is also required to provide

a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days before

the end of the calendar year. If approval is granted, the insurer shall file with its annual statement

filing the approval for relief with the states that it is licensed or doing business in and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

146

VERMONT

VT ADC 4-3-52:1 to 4-3-52:21 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify

as independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

147

VERMONT

VT ADC 4-3-52:1 to 4-3-52:21 ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall prepare a

report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along with an

addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial condition

examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

148

VERMONT

VT ADC 4-3-52:1 to 4-3-52:21 FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner within

five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all states it

is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in

an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

149

VIRGINIA

14 Va. Admin. Code § 5-270-10 to

14 Va. Admin. Code § 5-270-180

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All licensed insurers.

All licensed or authorized insurers.

Size Exemptions

Insurers having direct premiums

written of < $1,000,000 and <

1,000 policyholders unless

reinsurance assumed premiums

exceed $1,000,000.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any

calendar year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed

exceed $1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted

in an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule,

except Section 13A is not included.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

150

VIRGINIA

14 Va. Admin. Code § 5-270-10 to

14 Va. Admin. Code § 5-270-180

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

151

VIRGINIA

14 Va. Admin. Code § 5-270-10 to

14 Va. Admin. Code § 5-270-180

FILING DEADLINES

Audit Report

Domestic insurers — June 1;

Foreign and alien insurers — June

30.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Filed with audit report.

June 1.

Awareness Letter

Within 60 days after becoming

subject to the state’s audit

requirement.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

152

WASHINGTON

Wash. Admin. Code § 284-07-100

to Wash. Admin. Code

§ 284-07-240

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

153

WASHINGTON

Wash. Admin. Code § 284-07-100

to Wash. Admin. Code

§ 284-07-240

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request an exemption from

this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

154

WASHINGTON

Wash. Admin. Code § 284-07-100

to Wash. Admin. Code

§ 284-07-240

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

155

WEST VIRGINIA

W. Va. Code §§ 33-33-1 to

33-33-16

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audi Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

156

WEST VIRGINIA

W. Va. Code §§ 33-33-1 to

33-33-16

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit

Regulation Except uses $1,000,000

instead of $100,000,000 threshold.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

157

WEST VIRGINIA

W. Va. Code §§ 33-33-1 to

33-33-16

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

158

WISCONSIN

Wis. Admin. Code Ins. § 50.01 to

Wis. Admin. Code Ins. § 50.19

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

Same as NAIC Model Audit Rule.

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule,

except no requirement that foreign

insurer has filed Management’s

Report of Internal Control over

Financial Reporting in time

specified.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, and Notification of Adverse Condition. are filed within the

time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule,

except for definition of workpapers.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Same as NAIC Model Audit Rule.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

159

WISCONSIN

Wis. Admin. Code Ins. § 50.01 to

Wis. Admin. Code Ins. § 50.19

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

160

WISCONSIN

Wis. Admin. Code Ins. § 50.01 to

Wis. Admin. Code Ins. § 50.19

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in and

the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the

ssuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the commissioner

along with the Communication of Internal Control Related Matters Noted in an Audit.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

161

WYOMING

Wyo. Stat. Ann. § 26-3-301 to

Wyo. Stat. Ann. § 26-3-318

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Applicability

All insurers as defined in

W.S. 26-1- 102(a)(xvi).

All licensed or authorized insurers.

Size Exemptions

Same as NAIC Model Audit Rule.

Allowed for insurers having direct premiums in domestic state of < $1,000,000 in any calendar

year and < 1,000 policyholders nationwide, unless reinsurance premiums assumed exceed

$1,000,000.

Exemption from Filing in

Other States

Same as NAIC Model Audit Rule.

Allowed if audited reports required by the domestic state are deemed substantially similar

and Audited financial reports, Communication of Internal Control Related Matters Noted in

an Audit, Qualification Letter, Notification of Adverse Condition, and Management’s

Report of Internal Control over Financial Reporting are filed within the time specified.

Partner Rotation

Same as NAIC Model Audit Rule.

Partner limited to five consecutive years after which he/she cannot act in that capacity for five

years.

An insurer may make application to the commissioner for relief from the rotation requirement

on the basis on unusual circumstances.

Workpaper Requirements

Same as NAIC Model Audit Rule.

Retained until Report of Examination covering period is issued, but no longer than seven years.

Audit Committee

Requirements

Audit committees for insurers with

prior calendar year direct written and

assumed premiums of $500 million

or less shall have a majority of its

members qualify as independent.

Every insurer required to file an annual Audited financial report shall designate a group of

individuals as constituting its Audit committee.

Ultimate controlling person shall provide written notice describing the basis for electing to

designate a parent audit committee to serve in that function for the insurer.

Audit committees are charged with specific oversight responsibilities.

Audit committees for insurers with prior calendar year direct written and assumed premiums

between $300 million and $500 million shall have a minimum of 50% of its members qualify as

independent.

Audit committees for insurers with prior calendar year direct written and assumed premiums

greater than $500 million shall have a minimum of 75% of its members qualify as

independent.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

162

WYOMING

Wyo. Stat. Ann. § 26-3-301 to

Wyo. Stat. Ann. § 26-3-318

ANNUAL FINANCIAL REPORTING MODEL REGULATION (#205)

Internal Audit Function

Requirements

Same as NAIC Model Audit Rule.

An internal audit function is established with standards for independence and reporting.

Holding companies may meet this requirement at the ultimate controlling parent level,

intermediate holding company level or individual legal entity level. Exemption for insurers

with annual premium under $500,000,000 or, if insurance group, annual premium under

$1,000,000,000.

Prohibited Services

Same as NAIC Model Audit Rule.

The commissioner shall not accept Audited financial reports from an accountant who

provides prohibited non-audit services. Insurers having direct written and assumed

premiums of less than $100,000,000 in any calendar year may request and exemption

from this requirement.

Cooling-Off Period

Same as NAIC Model Audit Rule.

The commissioner shall not recognize a CPA as qualified to perform an audit if the insurer

employs a person in a key financial position that was previously employed by the CPA firm

and acted as a partner or senior manager involved in the insurer’s preceding audit. An insurer

may make an application to the commissioner for relief from the requirement on the basis of

unusual circumstances.

Conduct of Insurer in

Preparing Required Reports

Same as NAIC Model Audit Rule.

Directors and officers of insurers are required to meet minimum standards in providing

information to their auditors and regulators.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Every insurer with direct written and assumed premiums of $500 million or more shall

prepare a report.

If an insurer does not exceed the premium threshold, the commissioner may still require the

filing of this report if the insurer is in any RBC level event or meets any one or more of the

standards of an insurer deemed to be in hazardous financial condition.

An insurer may file its or its parent’s Sarbanes-Oxley Act Section 404 report along

with an addendum to fulfill the filing requirement.

The report shall include an assertion as to the effectiveness of internal controls over

statutory financial reporting along with other significant elements.

Management shall document and make available for review during the financial

condition examination the basis upon which its assertion is made.

NAIC’s Guide to Compliance

STATE AUDIT REQUIREMENTS

163

WYOMING

Wyo. Stat. Ann. § 26-3-301 to

Wyo. Stat. Ann. § 26-3-318

FILING DEADLINES

Audit Report

Same as NAIC Model Audit Rule.

June 1. The commissioner may require an insurer to file an Audited financial report earlier

than June 1 with 90 days advanced notice.

Designation of Auditor

Same as NAIC Model Audit Rule.

Within 60 days after becoming subject to regulation.

Qualification Letter

Same as NAIC Model Audit Rule.

June 1.

Awareness Letter

Same as NAIC Model Audit Rule.

Due date not specified.

Communication of Internal

Control Related Matters

Noted in an Audit

Same as NAIC Model Audit Rule.

Prepared by the accountant and filed within 60 days after filing of audited financial

statements; if no unremediated material weaknesses are noted, the communication should still

be filed and so state. If unremediated material weaknesses are noted, the insurer is also

required to provide a description of remedial actions to be taken with the filing.

Adverse Condition

Same as NAIC Model Audit Rule.

CPA must notify insurer within five business days; insurer shall notify Commissioner

within five business days of notification.

Change in Auditor

Same as NAIC Model Audit Rule.

Insurer must notify Commissioner within five business days of dismissal or resignation of

auditor.

Application for Relief from

Partner Rotation

Requirements

Same as NAIC Model Audit Rule.

The application for relief from partner rotation requirements must be made at least 30 days

before the end of the calendar year. If approval is granted, the insurer shall file with its annual

statement filing the approval for relief with the states that it is licensed or doing business in

and the NAIC.

Approval of Relief from

Cooling-Off Requirements

Same as NAIC Model Audit Rule.

The insurer shall file with its annual statement filing the approval for relief with all

states it is licensed or doing business in and the NAIC.

Audit Committee Election

Same as NAIC Model Audit Rule.

Notification of the election shall be made prior to the issuance of the statutory audit report

and the election shall remain in effect until rescinded.

Management’s Report of

Internal Controls over

Financial Reporting

Same as NAIC Model Audit Rule.

Report shall be as of the December 31 immediately preceding and filed with the

commissioner along with the Communication of Internal Control Related Matters Noted in an

Audit.

The NationalAssociation of Insurance Commissioners (NAIC) is the

U.S. standard-setting and regulatory support organization created

and governed by the chief insurance regulators from the 50 states,

the District of Columbia and five U.S. territories. Through the NAIC,

state insurance regulators establish standards and best practices,

conduct peer review, and coordinate their regulatory oversight.

NAIC staff supports these efforts and represents the collective

views of state regulators domestically and internationally. NAIC

members, together with the central resources of the NAIC, form

the national system of state-based insurance regulation in the U.S.

For more information, visit www.naic.org.