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.

Ins 50.14(1) (1) An insurer shall require the accountant or accounting firm which conducts an audit or other procedure under this subchapter to make available for review all work papers and any communications related to the audit or procedure between the insurer and the accountant or accounting firm at the offices of the insurer or at a reasonable place designated by the commissioner. The insurer 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.

Ins 50.14(2) (2) The commissioner may obtain copies of work papers and retain the copies. If copies of work papers are requested in electronic format, the electronic copies must be as fully functional as the original documents. Password protection of the storage medium used to transmit electronic work papers is acceptable in order to securely transfer electronic work papers to the commissioner. Passwords on individual electronic work papers, or passwords that disable features of individual electronic work papers, are not permitted. All working papers and communications obtained by the commissioner under this section are confidential under s. 601.465, Stats.

Ins 50.14 History History: Cr. Register, July, 1993, No. 451, eff. 8-1-93; CR 08-053: renum. from Ins 50.15 Register December 2008 No. 636, eff. 1-1-09; CR 17-015: am. (2) Register December 2017 No. 744, eff. 1-1-18.

Ins 50.15 Ins 50.15 Requirements for audit committees.

Ins 50.15(1) (1) This section does not apply to foreign or alien insurers licensed in this state or an insurer that is a SOX Compliant Entity or a direct or indirect wholly-owned subsidiary of a SOX Compliant Entity.

Ins 50.15(2) (2) The audit committee shall be directly responsible for the appointment, compensation and oversight of the work of any accountant, including resolution of disagreements between management and the accountant regarding financial reporting, for the purpose of preparing or issuing the audited financial report or related work pursuant to this chapter. Each accountant shall report directly to the audit committee.

Ins 50.15(2m) (2m) The audit committee shall be responsible for overseeing the insurer’s internal audit function and granting the person or persons performing the function suitable authority and resources to fulfill their responsibilities if required by s. Ins 50.155.

Ins 50.15(3) (3) Each member of the audit committee shall be a member of the board of directors of the insurer or a member of the board of directors of an entity elected pursuant to sub. (6) and s. Ins 50.01 (1r).

Ins 50.15(4) (4) In order to be considered independent for purposes of this section, a member of the audit committee may not, other than in the capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the entity or be an affiliated person of the entity or any subsidiary thereof. However, if a law requires board participation by otherwise non-independent members, the law shall prevail and the members may participate in the audit committee and be designated as independent for audit committee purposes, unless the members are an officer or employee of the insurer or one of its affiliates.

Ins 50.15(5) (5) If a member of the audit committee ceases to be independent for reasons outside the member’s reasonable control, the member, with notice by the insurer to the commissioner, may remain an audit committee member of the insurer until the earlier of the next annual meeting of the insurer or one year from the occurrence of the event that caused the member to be no longer independent.

Ins 50.15(6) (6) To exercise the election of the controlling person to designate the audit committee for purposes of this chapter, the ultimate controlling person shall provide written notice to the commissioner of the affected insurers. Notification shall be made timely prior to the issuance of the audited financial report and include a description of the basis for the election. The election can be changed through notice to the commissioner by the insurer, which shall include a description of the basis for the change. The election shall remain in effect for perpetuity, until rescinded.

Ins 50.15(7) (7) 

Ins 50.15(7)(a) (a) The audit committee shall require the independent certified public accountant that performs for an insurer any audit required by this chapter to timely report to the audit committee in accordance with the requirements of SAS 61, Communication with Audit Committees, or its replacement, including:

Ins 50.15(7)(a)1. 1. All significant accounting policies and material permitted practices.

Ins 50.15(7)(a)2. 2. All material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the insurer, ramification of the use of the alternative disclosures and treatments, and the treatment preferred by the independent certified public accountant.

Ins 50.15(7)(a)3. 3. Other material written communications between the independent certified public accountant and the management of the insurer, such as any management letter or schedule of unadjusted differences.