§3579. Qualified accountants

Link to law: http://legislature.vermont.gov/statutes/section/08/101/03579
Published: 2015

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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.)
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