Current through September 17, 2024
016.01 No director
or officer of an Insurer shall, directly or indirectly:
016.01(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 Rule; or
016.01(b) Omit to state, or cause another
person to omit to state, any material fact necessary in order to make
statements made, in light of the circumstances under which the statements were
made, not misleading to an accountant in connection with any audit, review or
communication required under this Rule.
016.02 No officer or director of an Insurer,
or any other person acting under the direction thereof, shall directly or
indirectly take any action to coerce, manipulate, mislead or fraudulently
influence any accountant engaged in the performance of an audit pursuant to
this Rule if that person knew or should have known that the action, if
successful, could result in rendering the Insurer's financial statements
materially misleading.
016.03 For
purposes of Section 016.02 of this section, actions that, "if successful, could
result in rendering the Insurer's financial statements materially misleading"
include, but are not limited to, actions taken at any time with respect to the
professional engagement period to coerce, manipulate, mislead or fraudulently
influence an accountant:
016.03(a) To issue
or reissue a report on an Insurer's financial statements that is not warranted
in the circumstances (due to material violations of statutory accounting
principles prescribed by the commissioner, generally accepted auditing
standards, or other professional or regulatory standards);
016.03(b) Not to perform audit, review or
other procedures required by generally accepted auditing standards or other
professional standards;
016.03(c)
Not to withdraw an issued report; or
016.03(d) Not to communicate matters to an
Insurer's Audit committee.
016.04 Management's Report of Internal
Control over Financial Reporting shall include:
016.04(a) A statement that management is
responsible for establishing and maintaining adequate Internal control over
financial reporting;
016.04(b) A
statement that management has established Internal control over financial
reporting and an assertion, to the best of management's knowledge and belief,
after diligent inquiry, as to whether its Internal control over financial
reporting is effective to provide reasonable assurance regarding the
reliability of financial statements in accordance with statutory accounting
principles;
016.04(c) A statement
that briefly describes the approach or processes by which management evaluated
the effectiveness of its Internal control over financial reporting;
and
016.04(d) A statement that
briefly describes the scope of work that is included and whether any Internal
controls were excluded;
016.04(e)
Disclosure of any unremediated material weaknesses in the Internal control over
financial reporting identified by management as of December 31 immediately
preceding. Management is not permitted to conclude that the Internal control
over financial reporting is effective to provide reasonable assurance regarding
the reliability of financial statements in accordance with statutory accounting
principles if there is one or more unremediated material weaknesses in its
Internal control over financial reporting;
016.04(f) A statement regarding the inherent
limitations of Internal control systems; and
016.04(g) Signatures of the chief executive
officer and the chief financial officer (or equivalent
position/title).
016.05
Management shall document and make available upon financial condition
examination the basis upon which its assertions, required in Section 016.04
above, are made. Management may base its assertions, in part, upon its review,
monitoring and testing of internal controls undertaken in the normal course of
its activities.
016.05(a) Management shall
have discretion as to the nature of the Internal control framework used, and
the nature and extent of documentation, in order to make its assertion in a
cost effective manner and, as such, may include assembly of or reference to
existing documentation.
016.05(b)
Management's Report on Internal Control over Financial Reporting, required by
Section 016.01 above, and any documentation provided in support thereof during
the course of a financial condition examination, shall be kept confidential by
the Department.
