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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
101
:
INSURANCE COMPANIES GENERALLY
Subchapter
007
:
EXAMINATION AND REPORTS
§
3579. Qualified accountants
(a) A certified
public accountant retained to perform audits of an insurer pursuant to the
annual financial reporting rule adopted by the Commissioner under section 3578a
of this title:
(1) shall be a
member in good standing of the American Institute of Certified Public
Accountants and in all states in which the accountant is licensed, or, for a
Canadian or British company, be a chartered accountant;
(2) shall be
independent with respect to the insurer;
(3) shall
conform to the standards of the profession as contained in the code of
professional ethics of the American Institute of Certified Public Accountants
and of the Vermont Board of Public Accountancy or similar codes governing such
accountant's professional conduct or ethics;
(4) shall not
directly or indirectly enter into an agreement of indemnification or release
from liability with respect to the insurer being audited where the intent or
effect is to shift or limit in any manner the potential liability of the person
or firm for failure to adhere to applicable auditing or professional standards,
whether or not resulting in part from knowing or other misrepresentations made
by the insurer or its representatives; and
(5) may enter
into an agreement with an insurer to have disputes relating to an audit
resolved by mediation or arbitration; provided, however, in the event of a
delinquency proceeding commenced against the insurer under chapter 145 of this
title, the mediation or arbitration provisions shall operate at the option of
the statutory successor.
(b) A domestic
insurer required to be audited pursuant to the annual financial reporting rule
adopted by the Commissioner under section 3578a of this title shall register
with the Commissioner the name and address of the certified public accountant
retained in compliance with this section and pay a registration fee of $100.00.
If the Commissioner determines that a report filed by a foreign or alien
insurer under subsection 3578(f) of this title is not substantially similar to
the requirements imposed by the annual financial reporting rule adopted by the
Commissioner under section 3578a of this title, the foreign or alien insurer
shall, within 30 days of such determination, register the name and address of
the certified public accountant retained in compliance with this section and
pay a registration fee of $100.00. The notice of registration shall include the
accountant's statement that the accountant:
(1) meets the
requirements of this section;
(2) is familiar
with the insurance laws of the insurer's state of domicile that relate to
accounting and financial matters;
(3) will express
his or her opinion on whether the financial statements conform to the statutory
accounting practices prescribed or permitted by the Department, and specify any
exceptions;
(4) understands
that the Commissioner will be relying on the accountant's report to monitor the
financial position of the insurer;
(5) agrees to
make available to the Commissioner for inspection or copying any and all work
papers generated in the audit including, procedures followed, tests performed,
information obtained, conclusions, planning documentation, work programs,
analyses, memoranda, letters of confirmation and representation, abstracts of
documents, schedules, or commentaries prepared or obtained by the independent
certified public accountant in the course of examination; and
(6) agrees to
retain the audit work papers until the Department has filed a report of
examination on the period of the audit, but no longer than seven years from the
date of the audit report.
(c) An insurer
shall notify the Commissioner in writing within five business days of the
dismissal or resignation of the accountant who prepared the insurer's
immediately preceding filed audited financial report. The insurer shall notify
the Commissioner in writing, within 10 business days of the notice of dismissal
or resignation, whether in the 24 months preceding such dismissal or
resignation there were any substantial, material disagreements with the former
accountant on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, including disagreements
resolved to the former accountant's satisfaction and disagreements not resolved
to the former accountant's satisfaction. Substantial disagreements include
those that occur between the former accountant and personnel of the insurer
responsible for the insurer's audited financial report. Material disagreements
include those which, if not resolved to the satisfaction of the former
accountant, would have caused him or her to make reference to the subject
matter of the disagreement in connection with his or her opinion.
(d)(1) The
Commissioner shall disqualify any certified public accountant who:
(A) has engaged
in unprofessional conduct as defined by 26 V.S.A. § 76;
(B) has been
found to have violated the insurance laws of any state with respect to prior
audit reports; or
(C) has
demonstrated a pattern or practice of failing to detect or disclose material
information in previous reports filed under this section.
(2) After notice
and hearing, the Commissioner may find that a certified public accountant is
not qualified to express his or her opinion in the report required by this
section and may require the insurer to replace the accountant with an
accountant qualified under this section. Any hearing held under this subsection
shall be governed by 3 V.S.A. chapter 25.
(e) No partner
or other person rendering the report required by the annual financial reporting
rule adopted by the Commissioner under section 3578a of this title may act in
that capacity for more than five consecutive years. Upon application by the
insurer, the Commissioner may find that the rotation requirement of this
subsection would pose an unreasonable hardship on the insurer and may extend
the accountant's period of qualification for an additional term. In making such
determinations, the Commissioner may consider the experience of the retained
accountant and the size of his or her business, the premium volume of the
insurer, and the number of jurisdictions in which the insurer transacts
business, as provided by the annual financial reporting rule adopted by the
Commissioner under section 3578 of this title.
(f) In the case
of Canadian and British insurers, the annual audited financial report shall be
defined as the annual statement of total business on the form filed by such
companies with their domiciliary supervision authority duly audited by an
independent chartered accountant. (Added 1991, No. 249 (Adj. Sess.), § 11;
amended 1993, No. 12, § 5, eff. April 26, 1993; 2007, No. 49, § 4; 2013, No.
29, § 26.)