Ins 50.09 Ins 50.09 Consolidated or combined audits. An insurer may file audited consolidated or combined financial statements in lieu of separate annual audited financial statements required under this subchapter if the commissioner approves in writing and if the insurer is part of a group of insurers which utilizes a pooling or 100% reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer cedes all of its direct and assumed business to the pool. If the commissioner permits a consolidated report under this section the report shall include a columnar consolidating or combining work sheet, as follows:

Ins 50.09(1) (1) Amounts shown on the consolidated or combined audited financial report shall be shown on the work sheet.

Ins 50.09(2) (2) Amounts for each insurer subject to this section shall be stated separately.

Ins 50.09(3) (3) Noninsurance operations may be shown on the work sheet on a combined or individual basis.

Ins 50.09(4) (4) Explanations of consolidating and eliminating entries shall be included.

Ins 50.09(5) (5) A reconciliation shall be included of any differences between the amounts shown in the individual insurer columns of the work sheet and comparable amounts shown on the annual statements of the insurers.

Ins 50.09 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93.

Ins 50.10 Ins 50.10 Scope of audit and report of independent certified public accountant. Financial statements furnished under s. Ins 50.06 shall be audited by the independent certified public accountant. The independent certified public accountant shall conduct the audit of the insurer’s financial statements in accordance with generally accepted auditing standards. In accordance with AU Section 319 of the Professional Standards of the AICPA, Consideration of Internal Control in a Financial Statement Audit, the independent certified public accountant should obtain an understanding of internal control sufficient to plan the audit. To the extent required by AU Section 319, for those insurers required to file a management’s report of internal control over financial reporting pursuant to s. Ins 50.17, the independent certified public accountant should consider, as that term is defined in Statement on Auditing Standards, SAS, No. 102, Defining Professional Requirements in Statements on Auditing Standards, or its replacement, the most recently available report in planning and performing the audit of the statutory financial statements. The independent certified public accountant shall give consideration to procedures illustrated in the financial condition examiner’s handbook promulgated by the national association of insurance commissioners as the independent certified public accountant deems necessary. The commissioner may require that an independent certified public accountant conduct additional procedures or provide additional reports.

Ins 50.10 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 07-023: am. Register September 2007 No. 621, eff. 10-1-07; CR 08-053: am. Register December 2008 No. 636, eff. 1-1-09.

Ins 50.11 Ins 50.11 Notification of adverse financial condition.

Ins 50.11(1) (1) An insurer shall require the independent certified public accountant to report, in writing and within 5 business days, to the board of directors of the insurer or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the commissioner as of the balance sheet date currently under audit or that the insurer does not meet the minimum capital and surplus or compulsory surplus requirements.

Ins 50.11(2) (2) An insurer 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.

Ins 50.11(3) (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 insurer under sub. (1) unless the independent certified public accountant receives evidence the insurer has provided it within the 10 business day period to the commissioner as required under sub. (2).

Ins 50.11(4) (4) An executive officer or director of an insurer 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 insurer complies with sub. (2).

Ins 50.11(5) (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.

Ins 50.11 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 08-053: am. (1), cr. (5) Register December 2008 No. 636, eff. 1-1-09.

Ins 50.12 Ins 50.12 Communication of internal control related matters noted in an audit.

Ins 50.12(1) (1) An insurer shall file with the commissioner within 60 days of the date an annual audited financial report is filed, or is required under s. Ins 50.05 to be filed, a written communication prepared by the independent certified public accountant describing any unremediated material weaknesses in its internal controls over financial reporting noted during the audit. Such communication shall be prepared by the independent certified public accountant and shall contain a description of any unremediated material weakness, as the term material weakness is defined by Statement on Auditing Standard 60, Communication of Internal Control Related Matters Noted in an Audit, or its replacement, as of December 31 immediately preceding, so as to coincide with the audited financial report discussed in s. Ins 50.05 (1), in the insurer’s internal control over financial reporting noted by the accountant during the course of the audit of the financial statements. If no unremediated material weaknesses were noted, the communication should so state.

Ins 50.12(2) (2) The insurer shall provide a description of remedial actions taken or proposed to correct unremediated material weaknesses, if the actions are not described in the independent certified public accountant’s communication.

Ins 50.12 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 08-053: am. (title), renum. to be (1) and am., cr. (2) Register December 2008 No. 636, eff. 1-1-09.

Ins 50.13 Ins 50.13 Accountant’s letter of qualifications. An accountant or accounting firm retained by an insurer to comply with this subchapter shall furnish the insurer, and the insurer shall obtain and include with the filing of the annual audited financial report required under s. Ins 50.05, a letter from the accountant or accounting firm stating:

Ins 50.13(1) (1) That the accountant or accounting firm is independent with respect to the insurer 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.

Ins 50.13(2) (2) The background and experience in general, and the experience in audits of insurers 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.

Ins 50.13(3) (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 insurers.

Ins 50.13(4) (4) That the accountant or accounting firm consents to the requirements of s. Ins 50.14 and that the accountant or accounting firm consents and agrees to make available work papers for review by the commissioner.

Ins 50.13(5) (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.

Ins 50.13(6) (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 50.08.

Ins 50.13 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 08-053: am. (4) Register December 2008 No. 636, eff. 1-1-09.

Ins 50.14 Ins 50.14 Availability and maintenance of CPA work papers.