Qualifications of accountant--limitation of number of years,when--approval by director--dispute resolution--accountant notrecognized, when--exemption, when--preapproval for nonauditservices performed, when.
375.1037. 1. The director shall not recognize any person or firm asa qualified independent certified public accountant if such person or firm:
(1) Is not in good standing with the American Institute of CertifiedPublic Accountants and in all states in which the accountant is licensed topractice, or, for a Canadian or British company, that is not a charteredaccountant;
(2) Has either directly or indirectly entered into an indemnificationwith respect to the audit of the insurer.
2. Except as otherwise provided in sections 375.1025 to 375.1062, thedirector shall recognize an independent certified public accountant asqualified as long as he or she conforms to the standards of his or herprofession, as contained in the code of professional ethics of the AmericanInstitute of Certified Public Accountants and rules and regulations andcode of ethics and rules of professional conduct of the Missouri stateboard of accountancy, or similar code.
3. The lead or coordinating audit partner or person having primaryresponsibility for the audit shall not act in that capacity for more thanfive consecutive years. Such partner or person shall be disqualified fromacting in that or a similar capacity for the same company or its insurancesubsidiaries or affiliates for a period of five years. An insurer may makeapplication to the director for relief from the above rotation requirementon the basis of unusual circumstances. Such application shall be made atleast thirty days before the end of the calendar year. The insurer shallfile, with its annual statement filing, the approval, if any, for relieffrom this subsection with the states that it is licensed in or doingbusiness in and with the NAIC. If the nondomestic state accepts electronicfiling with the NAIC, the insurer shall file the approval in an electronicformat acceptable to the NAIC. The director may consider the followingfactors in determining if the relief should be granted:
(1) Number of partners, expertise of the partners or the number ofinsurance clients in the currently registered firm;
(2) Premium volume of the insurer; or
(3) Number of jurisdictions in which the insurer transacts business.
4. The director shall neither recognize as a qualified independentcertified public accountant, nor accept any annual audited financialreport, prepared in whole or in part by any natural person who:
(1) Has been convicted of fraud, bribery, a violation of theRacketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961to 1968, or any dishonest conduct or practices under federal law or thelaws of any state;
(2) Has been found to have violated the laws of this state withrespect to any previous audited financial report submitted pursuant tosections 375.1025 to 375.1062; or
(3) Has demonstrated a pattern or practice of failing to detect ordisclose material information in previous reports filed under theprovisions of sections 375.1025 to 375.1062.
5. The director may hold a hearing under sections 536.100 to 536.140,RSMo, to determine whether an independent certified public accountant isqualified and, considering the evidence presented, may rule that theaccountant is not qualified for purposes of expressing his or her opinionon the financial statements in the annual audited financial report madepursuant to sections 375.1025 to 375.1062 and require the insurer toreplace the accountant with another whose relationship with the insurer isqualified within the meaning of sections 375.1025 to 375.1062.
6. A qualified independent certified public accountant may enter intoan agreement with an insurer to have disputes relating to an audit resolvedby mediation or arbitration. However, in the event of a delinquencyproceeding commenced against the insurer under sections 375.570 to 375.750,the mediation or arbitration provisions shall operate at the option of thestatutory successor.
7. The director shall not recognize as a qualified independentcertified public accountant, nor accept an annual audited financial report,prepared in whole or in part by an accountant who functions in the role ofmanagement, audits his or her own work, or serves in an advocacy role forthe insurer. Without limiting the foregoing, the director shall notrecognize as a qualified independent certified public accountant, noraccept an annual audited financial report, prepared in whole or in part byan accountant who provides to an insurer, contemporaneously with the audit,the following nonaudit services:
(1) Bookkeeping or other services related to the accounting recordsor financial statements of the insurer;
(2) Financial information systems design and implementation;
(3) Appraisal or valuation services, fairness opinions, orcontribution-in-kind reports;
(4) Actuarially oriented advisory services involving thedetermination of amounts recorded in the financial statements. Theaccountant may assist an insurer in understanding the methods, assumptions,and inputs used in the determination of amounts recorded in the financialstatement only if it is reasonable to conclude that the services providedwill not be subject to audit procedures during an audit of the insurer'sfinancial statements. An accountant's actuary may also issue an actuarialopinion or certification (opinion) on an insurer's reserves if thefollowing conditions have been met:
(a) Neither the accountant nor the accountant's actuary has performedany management functions or made any management decisions;
(b) The insurer has competent personnel (or engages a third-partyactuary) to estimate the reserves for which management takesresponsibility; and
(c) The accountant's actuary tests the reasonableness of the reservesafter the insurer's management has determined the amount of the reserves;
(5) Internal audit outsourcing services;
(6) Management functions or human resources;
(7) Broker or dealer, investment advisor*, or investment bankingservices;
(8) Legal services or expert services unrelated to the audit; or
(9) Any other services that the director determines, by rule, areimpermissible.
8. Insurers having direct written and assumed premiums of less thanone hundred million dollars in any calendar year may request an exemptionfrom subsection 7 of this section. The insurer shall file with thedirector a written statement discussing the reasons why the insurer shouldbe exempt from these provisions. If the director finds, upon review ofthis statement, that compliance with this requirement would constitute afinancial or organizational hardship upon the insurer, an exemption may begranted.
9. A qualified independent certified public accountant who performsthe audit may engage in other nonaudit services, including tax services,that are not described in and do not conflict with subsection 7 of thissection, only if the activity is approved in advance by the auditcommittee, in accordance with subsection 10 of this section.
10. All auditing services and nonaudit services provided to aninsurer by the qualified independent certified public accountant of theinsurer shall be preapproved by the audit committee. The preapprovalrequirement is waived with respect to nonaudit services if the insurer is aSOX compliant entity or a direct or indirect wholly owned subsidiary of aSOX compliant entity or:
(1) The aggregate amount of all such nonaudit services provided tothe insurer constitutes not more than five percent of the total amount offees paid by the insurer to its qualified independent certified publicaccountant during the fiscal year in which the nonaudit services areprovided;
(2) The services were not recognized by the insurer at the time ofthe engagement to be nonaudit services; and
(3) The services are promptly brought to the attention of the auditcommittee and approved prior to the completion of the audit by the auditcommittee or by one or more members of the audit committee who are themembers of the board of directors to whom authority to grant such approvalshas been delegated by the audit committee.
11. The audit committee may delegate to one or more designatedmembers of the audit committee the authority to grant the preapprovalsrequired by subsection 10 of this section. The decisions of any member towhom this authority is delegated shall be presented to the full auditcommittee at each of its scheduled meetings.
12. The director shall not recognize an independent certified publicaccountant as qualified for a particular insurer if a member of the board,president, chief executive officer, controller, chief financial officer,chief accounting officer, or any person serving in an equivalent positionfor that insurer was employed by the independent certified publicaccountant and participated in the audit of that insurer during theone-year period preceding the date that the most current statutory opinionis due.
13. Subsection 12 of this section shall only apply to partners andsenior managers involved in the audit. An insurer may make application tothe director for relief from subsection 12 of this section on the basis ofunusual circumstances. The insurer shall file, with its annual statementfiling, the approval for relief from subsection 12 of this section with thestates that it is licensed in or doing business in and the NAIC. If thenondomestic state accepts electronic filing with the NAIC, the insurershall file the approval in an electronic format acceptable to the NAIC.
Qualifications of accountant--limitation of number of years,when--approval by director--dispute resolution--accountant notrecognized, when--exemption, when--preapproval for nonauditservices performed, when.
375.1037. 1. The director shall not recognize any person or firm asa qualified independent certified public accountant if such person or firm:
(1) Is not in good standing with the American Institute of CertifiedPublic Accountants and in all states in which the accountant is licensed topractice, or, for a Canadian or British company, that is not a charteredaccountant;
(2) Has either directly or indirectly entered into an indemnificationwith respect to the audit of the insurer.
2. Except as otherwise provided in sections 375.1025 to 375.1062, thedirector shall recognize an independent certified public accountant asqualified as long as he or she conforms to the standards of his or herprofession, as contained in the code of professional ethics of the AmericanInstitute of Certified Public Accountants and rules and regulations andcode of ethics and rules of professional conduct of the Missouri stateboard of accountancy, or similar code.
3. The lead or coordinating audit partner or person having primaryresponsibility for the audit shall not act in that capacity for more thanfive consecutive years. Such partner or person shall be disqualified fromacting in that or a similar capacity for the same company or its insurancesubsidiaries or affiliates for a period of five years. An insurer may makeapplication to the director for relief from the above rotation requirementon the basis of unusual circumstances. Such application shall be made atleast thirty days before the end of the calendar year. The insurer shallfile, with its annual statement filing, the approval, if any, for relieffrom this subsection with the states that it is licensed in or doingbusiness in and with the NAIC. If the nondomestic state accepts electronicfiling with the NAIC, the insurer shall file the approval in an electronicformat acceptable to the NAIC. The director may consider the followingfactors in determining if the relief should be granted:
(1) Number of partners, expertise of the partners or the number ofinsurance clients in the currently registered firm;
(2) Premium volume of the insurer; or
(3) Number of jurisdictions in which the insurer transacts business.
4. The director shall neither recognize as a qualified independentcertified public accountant, nor accept any annual audited financialreport, prepared in whole or in part by any natural person who:
(1) Has been convicted of fraud, bribery, a violation of theRacketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961to 1968, or any dishonest conduct or practices under federal law or thelaws of any state;
(2) Has been found to have violated the laws of this state withrespect to any previous audited financial report submitted pursuant tosections 375.1025 to 375.1062; or
(3) Has demonstrated a pattern or practice of failing to detect ordisclose material information in previous reports filed under theprovisions of sections 375.1025 to 375.1062.
5. The director may hold a hearing under sections 536.100 to 536.140,RSMo, to determine whether an independent certified public accountant isqualified and, considering the evidence presented, may rule that theaccountant is not qualified for purposes of expressing his or her opinionon the financial statements in the annual audited financial report madepursuant to sections 375.1025 to 375.1062 and require the insurer toreplace the accountant with another whose relationship with the insurer isqualified within the meaning of sections 375.1025 to 375.1062.
6. A qualified independent certified public accountant may enter intoan agreement with an insurer to have disputes relating to an audit resolvedby mediation or arbitration. However, in the event of a delinquencyproceeding commenced against the insurer under sections 375.570 to 375.750,the mediation or arbitration provisions shall operate at the option of thestatutory successor.
7. The director shall not recognize as a qualified independentcertified public accountant, nor accept an annual audited financial report,prepared in whole or in part by an accountant who functions in the role ofmanagement, audits his or her own work, or serves in an advocacy role forthe insurer. Without limiting the foregoing, the director shall notrecognize as a qualified independent certified public accountant, noraccept an annual audited financial report, prepared in whole or in part byan accountant who provides to an insurer, contemporaneously with the audit,the following nonaudit services:
(1) Bookkeeping or other services related to the accounting recordsor financial statements of the insurer;
(2) Financial information systems design and implementation;
(3) Appraisal or valuation services, fairness opinions, orcontribution-in-kind reports;
(4) Actuarially oriented advisory services involving thedetermination of amounts recorded in the financial statements. Theaccountant may assist an insurer in understanding the methods, assumptions,and inputs used in the determination of amounts recorded in the financialstatement only if it is reasonable to conclude that the services providedwill not be subject to audit procedures during an audit of the insurer'sfinancial statements. An accountant's actuary may also issue an actuarialopinion or certification (opinion) on an insurer's reserves if thefollowing conditions have been met:
(a) Neither the accountant nor the accountant's actuary has performedany management functions or made any management decisions;
(b) The insurer has competent personnel (or engages a third-partyactuary) to estimate the reserves for which management takesresponsibility; and
(c) The accountant's actuary tests the reasonableness of the reservesafter the insurer's management has determined the amount of the reserves;
(5) Internal audit outsourcing services;
(6) Management functions or human resources;
(7) Broker or dealer, investment advisor*, or investment bankingservices;
(8) Legal services or expert services unrelated to the audit; or
(9) Any other services that the director determines, by rule, areimpermissible.
8. Insurers having direct written and assumed premiums of less thanone hundred million dollars in any calendar year may request an exemptionfrom subsection 7 of this section. The insurer shall file with thedirector a written statement discussing the reasons why the insurer shouldbe exempt from these provisions. If the director finds, upon review ofthis statement, that compliance with this requirement would constitute afinancial or organizational hardship upon the insurer, an exemption may begranted.
9. A qualified independent certified public accountant who performsthe audit may engage in other nonaudit services, including tax services,that are not described in and do not conflict with subsection 7 of thissection, only if the activity is approved in advance by the auditcommittee, in accordance with subsection 10 of this section.
10. All auditing services and nonaudit services provided to aninsurer by the qualified independent certified public accountant of theinsurer shall be preapproved by the audit committee. The preapprovalrequirement is waived with respect to nonaudit services if the insurer is aSOX compliant entity or a direct or indirect wholly owned subsidiary of aSOX compliant entity or:
(1) The aggregate amount of all such nonaudit services provided tothe insurer constitutes not more than five percent of the total amount offees paid by the insurer to its qualified independent certified publicaccountant during the fiscal year in which the nonaudit services areprovided;
(2) The services were not recognized by the insurer at the time ofthe engagement to be nonaudit services; and
(3) The services are promptly brought to the attention of the auditcommittee and approved prior to the completion of the audit by the auditcommittee or by one or more members of the audit committee who are themembers of the board of directors to whom authority to grant such approvalshas been delegated by the audit committee.
11. The audit committee may delegate to one or more designatedmembers of the audit committee the authority to grant the preapprovalsrequired by subsection 10 of this section. The decisions of any member towhom this authority is delegated shall be presented to the full auditcommittee at each of its scheduled meetings.
12. The director shall not recognize an independent certified publicaccountant as qualified for a particular insurer if a member of the board,president, chief executive officer, controller, chief financial officer,chief accounting officer, or any person serving in an equivalent positionfor that insurer was employed by the independent certified publicaccountant and participated in the audit of that insurer during theone-year period preceding the date that the most current statutory opinionis due.
13. Subsection 12 of this section shall only apply to partners andsenior managers involved in the audit. An insurer may make application tothe director for relief from subsection 12 of this section on the basis ofunusual circumstances. The insurer shall file, with its annual statementfiling, the approval for relief from subsection 12 of this section with thestates that it is licensed in or doing business in and the NAIC. If thenondomestic state accepts electronic filing with the NAIC, the insurershall file the approval in an electronic format acceptable to the NAIC.
Qualifications of accountant--limitation of number of years,when--approval by director--dispute resolution--accountant notrecognized, when--exemption, when--preapproval for nonauditservices performed, when.
375.1037. 1. The director shall not recognize any person or firm asa qualified independent certified public accountant if such person or firm:
(1) Is not in good standing with the American Institute of CertifiedPublic Accountants and in all states in which the accountant is licensed topractice, or, for a Canadian or British company, that is not a charteredaccountant;
(2) Has either directly or indirectly entered into an indemnificationwith respect to the audit of the insurer.
2. Except as otherwise provided in sections 375.1025 to 375.1062, thedirector shall recognize an independent certified public accountant asqualified as long as he or she conforms to the standards of his or herprofession, as contained in the code of professional ethics of the AmericanInstitute of Certified Public Accountants and rules and regulations andcode of ethics and rules of professional conduct of the Missouri stateboard of accountancy, or similar code.
3. The lead or coordinating audit partner or person having primaryresponsibility for the audit shall not act in that capacity for more thanfive consecutive years. Such partner or person shall be disqualified fromacting in that or a similar capacity for the same company or its insurancesubsidiaries or affiliates for a period of five years. An insurer may makeapplication to the director for relief from the above rotation requirementon the basis of unusual circumstances. Such application shall be made atleast thirty days before the end of the calendar year. The insurer shallfile, with its annual statement filing, the approval, if any, for relieffrom this subsection with the states that it is licensed in or doingbusiness in and with the NAIC. If the nondomestic state accepts electronicfiling with the NAIC, the insurer shall file the approval in an electronicformat acceptable to the NAIC. The director may consider the followingfactors in determining if the relief should be granted:
(1) Number of partners, expertise of the partners or the number ofinsurance clients in the currently registered firm;
(2) Premium volume of the insurer; or
(3) Number of jurisdictions in which the insurer transacts business.
4. The director shall neither recognize as a qualified independentcertified public accountant, nor accept any annual audited financialreport, prepared in whole or in part by any natural person who:
(1) Has been convicted of fraud, bribery, a violation of theRacketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961to 1968, or any dishonest conduct or practices under federal law or thelaws of any state;
(2) Has been found to have violated the laws of this state withrespect to any previous audited financial report submitted pursuant tosections 375.1025 to 375.1062; or
(3) Has demonstrated a pattern or practice of failing to detect ordisclose material information in previous reports filed under theprovisions of sections 375.1025 to 375.1062.
5. The director may hold a hearing under sections 536.100 to 536.140,RSMo, to determine whether an independent certified public accountant isqualified and, considering the evidence presented, may rule that theaccountant is not qualified for purposes of expressing his or her opinionon the financial statements in the annual audited financial report madepursuant to sections 375.1025 to 375.1062 and require the insurer toreplace the accountant with another whose relationship with the insurer isqualified within the meaning of sections 375.1025 to 375.1062.
6. A qualified independent certified public accountant may enter intoan agreement with an insurer to have disputes relating to an audit resolvedby mediation or arbitration. However, in the event of a delinquencyproceeding commenced against the insurer under sections 375.570 to 375.750,the mediation or arbitration provisions shall operate at the option of thestatutory successor.
7. The director shall not recognize as a qualified independentcertified public accountant, nor accept an annual audited financial report,prepared in whole or in part by an accountant who functions in the role ofmanagement, audits his or her own work, or serves in an advocacy role forthe insurer. Without limiting the foregoing, the director shall notrecognize as a qualified independent certified public accountant, noraccept an annual audited financial report, prepared in whole or in part byan accountant who provides to an insurer, contemporaneously with the audit,the following nonaudit services:
(1) Bookkeeping or other services related to the accounting recordsor financial statements of the insurer;
(2) Financial information systems design and implementation;
(3) Appraisal or valuation services, fairness opinions, orcontribution-in-kind reports;
(4) Actuarially oriented advisory services involving thedetermination of amounts recorded in the financial statements. Theaccountant may assist an insurer in understanding the methods, assumptions,and inputs used in the determination of amounts recorded in the financialstatement only if it is reasonable to conclude that the services providedwill not be subject to audit procedures during an audit of the insurer'sfinancial statements. An accountant's actuary may also issue an actuarialopinion or certification (opinion) on an insurer's reserves if thefollowing conditions have been met:
(a) Neither the accountant nor the accountant's actuary has performedany management functions or made any management decisions;
(b) The insurer has competent personnel (or engages a third-partyactuary) to estimate the reserves for which management takesresponsibility; and
(c) The accountant's actuary tests the reasonableness of the reservesafter the insurer's management has determined the amount of the reserves;
(5) Internal audit outsourcing services;
(6) Management functions or human resources;
(7) Broker or dealer, investment advisor*, or investment bankingservices;
(8) Legal services or expert services unrelated to the audit; or
(9) Any other services that the director determines, by rule, areimpermissible.
8. Insurers having direct written and assumed premiums of less thanone hundred million dollars in any calendar year may request an exemptionfrom subsection 7 of this section. The insurer shall file with thedirector a written statement discussing the reasons why the insurer shouldbe exempt from these provisions. If the director finds, upon review ofthis statement, that compliance with this requirement would constitute afinancial or organizational hardship upon the insurer, an exemption may begranted.
9. A qualified independent certified public accountant who performsthe audit may engage in other nonaudit services, including tax services,that are not described in and do not conflict with subsection 7 of thissection, only if the activity is approved in advance by the auditcommittee, in accordance with subsection 10 of this section.
10. All auditing services and nonaudit services provided to aninsurer by the qualified independent certified public accountant of theinsurer shall be preapproved by the audit committee. The preapprovalrequirement is waived with respect to nonaudit services if the insurer is aSOX compliant entity or a direct or indirect wholly owned subsidiary of aSOX compliant entity or:
(1) The aggregate amount of all such nonaudit services provided tothe insurer constitutes not more than five percent of the total amount offees paid by the insurer to its qualified independent certified publicaccountant during the fiscal year in which the nonaudit services areprovided;
(2) The services were not recognized by the insurer at the time ofthe engagement to be nonaudit services; and
(3) The services are promptly brought to the attention of the auditcommittee and approved prior to the completion of the audit by the auditcommittee or by one or more members of the audit committee who are themembers of the board of directors to whom authority to grant such approvalshas been delegated by the audit committee.
11. The audit committee may delegate to one or more designatedmembers of the audit committee the authority to grant the preapprovalsrequired by subsection 10 of this section. The decisions of any member towhom this authority is delegated shall be presented to the full auditcommittee at each of its scheduled meetings.
12. The director shall not recognize an independent certified publicaccountant as qualified for a particular insurer if a member of the board,president, chief executive officer, controller, chief financial officer,chief accounting officer, or any person serving in an equivalent positionfor that insurer was employed by the independent certified publicaccountant and participated in the audit of that insurer during theone-year period preceding the date that the most current statutory opinionis due.
13. Subsection 12 of this section shall only apply to partners andsenior managers involved in the audit. An insurer may make application tothe director for relief from subsection 12 of this section on the basis ofunusual circumstances. The insurer shall file, with its annual statementfiling, the approval for relief from subsection 12 of this section with thestates that it is licensed in or doing business in and the NAIC. If thenondomestic state accepts electronic filing with the NAIC, the insurershall file the approval in an electronic format acceptable to the NAIC.
