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History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.23Transactions subject to prior notice — notice filing. A person required to give notice of a proposed transaction under this chapter shall furnish the required information in substantially similar in format and in response to questions presented on form B in Appendix 1.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.24Dividends and other distributions. Requests for approval of dividends or any other distributions to shareholders or corporate members shall include the following:
(1)The amount of the proposed dividend or distribution;
(2)The date established for payment of the dividend or distribution;
(3)A statement as to whether the dividend or distribution is to be in cash or other property and, if in property, a description of the property, its cost, and its fair market value together with an explanation of the basis for valuation;
(4)A balance sheet and statement of income for the period between the date on which of the last annual statement was filed with the commissioner and the end of the month preceding the month in which the request for dividend approval is submitted.
(5)A brief statement as to the effect of the proposed dividend upon the care management organization’s net assets, the reasonableness of net assets in relation to the care management organization’s outstanding liabilities, and the adequacy of net assets relative to the care management organization’s financial needs.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.25Consent to jurisdiction. Any person required to file consent to jurisdiction under s. 648.45 (3), Stats., shall do so in a format substantially similar to the format and questions contained in form C of Appendix 1 to this chapter.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.26General requirements related to filing and extensions for filing of annual audited financial reports.
(1)A care management organization shall:
(a) Annually obtain or cause an audit of the care management organization by an independent certified public accountant; and
(b) File an audited financial report that complies with s. Ins 57.30 with the commissioner on or before June 1 for the immediately preceding calendar year. If the care management organization is part of a county financial audit, the deadline for the Family Care care management organization audit is the deadline for the county financial audit, which is nine months from the end of the fiscal period.
(2)The commissioner may require a care management organization to file the audited financial report earlier than the date specified under sub. (1) if the commissioner gives 90 days advance notice to the care management organization.
(3)The commissioner may grant extensions of the filing date under sub. (1) for 31-day periods if the care management organization and independent certified public accountant establish there is good cause for an extension. A request for an extension shall be submitted in writing not less than 10 days prior to the date specified under sub. (1) in sufficient detail to permit the commissioner to make an informed decision with respect to the requested extension.
(4)A care management organization may not retain an accountant or accounting firm to comply with sub. (1) or s. Ins 57.31 unless the accountant or accounting firm is an independent certified public accountant, regardless of whether the commissioner has issued a ruling under s. Ins 57.32 (1). A care management organization may not retain an accountant or accounting firm to comply with sub. (1) or s. Ins 57.31 if the commissioner under s. Ins 57.32 (1) rules that the accountant or accounting firm is not qualified or if the accountant or accounting firm does not comply with s. Ins 57.32 (2).
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.30Contents of annual audited financial report. The annual audited financial report required under s. Ins 57.26 shall comply with all of the following:
(1)Report the financial position of the care management organization as of the end of the most recent calendar year and the results of its operations, cash flows and changes in net assets for that year in conformity with generally accepted accounting principles.
(2)Include all of the following:
(a) The report of the independent certified public accountant.
(b) A balance sheet reporting assets, liabilities, and net assets.
(c) A statement of operations.
(d) A statement of cash flows.
(e) A statement of changes in net assets.
(f) A report on the internal control environment of the CMO.
(g) A report describing the system of cost allocation for shared overhead and direct services between programs or lines of business.
(h) A supplemental financial report that demonstrates the financial position and segregated reserves of the CMO business for each state program contract where the organization serves members under multiple Medicaid managed care contracts or other lines of business. The report shall be in columnar format for the various programs as required.
(i) Management letter as issued or written assurance that a management letter was not issued with the audit report.
(j) Management responses and corrective action plan for each audit issue identified in the audit report or in the management letter.
(k) Notes to financial statements. These notes shall be those required by generally accepted accounting principles. The notes shall include a reconciliation of differences, if any, between the audited financial statements and the annual statement filed pursuant to s. Ins 57.40 with a written description of the nature of these differences.
(3)The financial statement shall be comparative, presenting the amounts as of December 31 of the current year and the amounts as of the immediately preceding December 31, except in the first year in which a care management organization is required to file an audited financial report, the comparative data may be omitted.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10; correction in (2) (k) made under s. 13.92 (4) (b) 7., Stats., Register May 2010 No. 653.
Ins 57.31Designation of independent certified public accountant.
(1)A care management organization shall, within 60 days after the care management organization becomes subject to this subchapter:
(a) Provide the commissioner in writing the name and address of the independent certified public accountant retained to conduct the annual audit required by this subchapter.
(b) File with the commissioner a copy of the letter required to be obtained under sub. (3).
(2)Care management organizations not retaining an independent certified public accountant on June 1, 2010, shall register the name and address of their retained independent certified public accountant not less than 6 months before the date when the first audited financial report is to be filed.
(3)A care management organization shall obtain a letter from the independent certified public accountant it retains to conduct the annual audit required by this subchapter. The letter shall state that the independent certified public accountant:
(a) Is aware of the provisions of the administrative code and the rules and regulations of the insurance department or equivalent agency of the state of domicile of the care management organization that relate to accounting and financial matters of care management organizations; and
(b) Will express an opinion on whether the financial statements conform to the generally accepted accounting practices prescribed or otherwise permitted by that department or equivalent agency and will specify exceptions as appropriate.
(4)If an independent certified public accountant for the immediately preceding filed audited financial report of a care management organization is dismissed or resigns, the care management organization shall comply with all of the following:
(a) The care management organization shall within 5 business days notify the commissioner of the dismissal or resignation.
(b) The care management organization shall within 15 business days of the dismissal or resignation furnish the commissioner with a letter which clearly states that there was no disagreement required to be disclosed under this paragraph or which describes any disagreement between the care management organization and the independent certified public accountant in the 24 months preceding the dismissal or resignation, which:
1. Was on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure; and
2. Would require the independent certified public accountant to make reference to the subject matter of the disagreement in connection with the opinion required under s. Ins 57.30. The requirement to provide a description applies regardless of whether the disagreement was resolved or whether the former independent certified public accountant was satisfied with the resolution.
(c) The care management organization shall within 15 business days of the dismissal or resignation furnish the commissioner with a letter from the independent certified public accountant addressed to the care management organization stating whether the independent certified public accountant agrees with the statements contained in the care management organization’s letter required under par. (b) and, if not, stating the reasons why not.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.32Qualifications of independent certified public accountants.
(1)The commissioner may rule that an accountant or accounting firm is not qualified for purposes of expressing an opinion on the financial statements in the annual audited financial report required under this subchapter, prohibit care management organizations from retaining the accountant or an accounting firm, and require care management organizations to replace the accountant or accounting firm, if the commissioner finds there is cause, including, but not limited to, a finding that the accountant or accounting firm:
(a) Is not in good standing with the American institute of certified public accountants and in all states in which the accountant or accounting firm is, or is required to be, licensed to practice;
(b) Has either directly or indirectly entered into an agreement of indemnification with respect to the audit of the care management organization;
(c) Has not conformed to the standards of the accounting profession as contained in the code of professional ethics of the American institute of certified public accountants and rules and regulations and code of ethics and rules of professional conduct of the accounting examining board, or a similar code;
(d) Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 USC 1961 to 1968, as revised, or any dishonest conduct or practices under federal or state law;
(e) Has been found to have violated the insurance laws or rules of this state; or
(f) Has demonstrated a pattern or practice of failing to detect or disclose material information in financial reports.
(2)The commissioner may not recognize an independent certified public accountant as qualified for a particular care management organization if a member of the board, president, chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for the care management organization was employed by the independent certified public accountant and participated in the audit of the care management organization during the one-year period preceding the date that the most current statutory opinion is due. This subsection shall only apply to partners and senior managers involved in the audit. A care management organization may make application to the commissioner for relief from the requirement of this paragraph on the basis of unusual circumstances.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.33Scope of audit and report of independent certified public accountant. Financial statements furnished under s. Ins 57.30 shall be audited by the independent certified public accountant. The independent certified public accountant shall conduct the audit of the care management organization’s financial statements in accordance with generally accepted auditing standards.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.35Notification of adverse financial condition.
(1)A care management organization shall require the independent certified public accountant to report, in writing and within 5 business days, to the board of directors of the care management organization or its audit committee any determination by the independent certified public accountant that the care management organization has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under audit or that the care management organization does not meet the working capital or risk reserve requirements.
(2)A care management organization who receives a report required under sub. (1) shall forward a copy of the report to the commissioner within 5 business days of receipt of the report and shall provide the independent certified public accountant making the report with evidence that the report has been furnished to the commissioner.
(3)An independent certified public accountant shall furnish to the commissioner a copy of its report required under sub. (1) within 10 business days after it is furnished to the care management organization under sub. (1) unless the independent certified public accountant receives evidence the care management organization has provided it within the 10 business day period to the commissioner as required under sub. (2).
(4)An executive officer or director of a care management organization which receives notice under sub. (1) shall report the notification in writing to the commissioner within 5 business days of the date the executive officer or director first acquires knowledge of the notification unless prior to that date the care management organization complies with sub. (2).
(5)If the independent certified public accountant, subsequent to the date of the audited financial report filed pursuant to this chapter, becomes aware of facts that might have affected the report, the independent certified public accountant shall take the action as prescribed in Volume 1, Section AU 561 of the Professional Standards of the AICPA.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.37Accountant’s letter of qualifications. An accountant or accounting firm retained by a care management organization to comply with this subchapter shall furnish the care management organization, and the care management organization shall obtain and include with the filing of the annual audited financial report required under s. Ins 57.26, a letter from the accountant or accounting firm stating:
(1)That the accountant or accounting firm is independent with respect to the care management organization and conforms to the standards of his or her profession as contained in the code of professional ethics and pronouncements of the American institute of certified public accountants and the rules of professional conduct of the board of public accountancy of this state, or similar code.
(2)The background and experience, in general, and the experience in audits of care management organizations of the staff assigned to the engagement and whether each is an independent certified public accountant. This subchapter does not prohibit the accountant or accounting firm from utilizing such staff as he or she deems appropriate where use is consistent with the standards prescribed by generally accepted auditing standards.
(3)That the accountant or accounting firm understands that the annual audited financial report and his or her opinion on the annual audited financial report will be filed in compliance with this chapter and that the commissioner will be relying on this information in the monitoring and regulation of the financial position of care management organizations.
(4)That the accountant or accounting firm consents to the requirements of s. Ins 57.38 and that the accountant or accounting firm consents and agrees to make work papers available for review by the commissioner.
(5)A representation that the accountant or accounting firm is properly licensed by an appropriate state licensing authority and is a member in good standing in the American institute of certified public accountants.
(6)A representation that the accountant or accounting firm is an independent certified public accounting firm and that there are no grounds for disqualification of the accountant or accounting firm under s. Ins 57.32.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.38Availability and maintenance of CPA work papers.
(1)A care management organization shall require the accountant or accounting firm which conducts an audit or other procedure under this subchapter to make available for review by the commissioner all work papers and any communications related to the audit or procedure between the care management organization and the accountant or accounting firm at the offices of the care management organization or at a reasonable place designated by the commissioner. The care management organization shall require that the accountant retain the audit work papers and communications until the commissioner has filed a report on examination covering the period of the audit but no longer than 7 years from the date of the audit report.
(2)The commissioner may access work papers, reports, and other materials generated during the audit. Such access shall include the right to obtain photocopies of the work papers and copies of computer disks, or other electronic media, upon which records or working papers are stored. All working papers and communications obtained by the commissioner under this section may be treated by the commissioner as confidential under s. 601.465, Stats.
History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.
Ins 57.39Conduct of care management organization in connection with the preparation of required reports and documents.
(1)No director or officer of a care management organization may, directly or indirectly:
(a) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review or communication required under this chapter.
(b) Make or cause to be made omissions of any material fact necessary in order to make statements made not misleading to an accountant in connection with any audit, review or communication required under this chapter.
(2)No officer or director of a care management organization, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any independent certified public accountant engaged in the performance of an audit pursuant to this chapter if that person knew or should have known that the action, if successful, could result in rendering the care management organization’s financial statements materially misleading. In this subsection, actions that “if successful, could result in rendering the care management organization’s financial statements materially misleading” include actions taken at any time with respect to the professional engagement period to coerce, manipulate, mislead or fraudulently influence an independent certified public accountant to do any of the following:
(a) To issue or reissue a report on a care management organization’s financial statements that is not warranted in the circumstances, due to material violations of generally accepted accounting principles, generally accepted auditing standards, or other professional or regulatory standards.
(b) To not perform audit, review or other procedures required by generally accepted auditing standards or other professional standards.
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Published under s. 35.93, Stats. Updated on the first day of each month. Entire code is always current. The Register date on each page is the date the chapter was last published.