This text of Indiana § 27-1-3.5-9 (Qualifications of independent auditor) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
(a)For the purposes of this chapter, the
commissioner may not recognize as an independent auditor any
individual or firm that is not:
(1)a certified public accountant (if an individual) or made up of
certified public accountants (if a firm); or
(2)in good standing with:
(A)the American Institute of Certified Public Accountants; and
(B)all of the authorities that license certified public
accountants and certified public accounting firms in the states
in which the individual or firm is licensed to practice.
(b)A partner or other individual responsible for rendering a report
may not act in that capacity for more than five (5) consecutive years.
An individual who has been responsible for rendering a report for five
(5)years is disqualified from acting in that or a similar capacity for t
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(a) For the purposes of this chapter, the
commissioner may not recognize as an independent auditor any
individual or firm that is not:
(1) a certified public accountant (if an individual) or made up of
certified public accountants (if a firm); or
(2) in good standing with:
(A) the American Institute of Certified Public Accountants; and
(B) all of the authorities that license certified public
accountants and certified public accounting firms in the states
in which the individual or firm is licensed to practice.
(b) A partner or other individual responsible for rendering a report
may not act in that capacity for more than five (5) consecutive years.
An individual who has been responsible for rendering a report for five
(5) years is disqualified from acting in that or a similar capacity for the
same company or its insurance subsidiaries or affiliates for five (5)
years. A domestic insurer may apply to the commissioner and request
to be exempted from the five (5) year rotation requirement on the basis
of unusual circumstances. The commissioner may consider the
following factors in determining if relief should be granted:
(1) The number of partners, expertise of the partners, or number
of insurance clients in the currently registered firm.
(2) The premium volume of the domestic insurer.
(3) The number of jurisdictions in which the domestic insurer
transacts business.
(c) The commissioner may not recognize as an independent auditor
or accept an annual audited financial report prepared in whole or part
by a person who:
(1) has been convicted of fraud, bribery, a violation of the
Racketeer Influenced and Corrupt Organizations Act under
federal law (18 U.S.C. 1961 through 1968) or state law (IC 35-45-6) or any dishonest conduct or practices under federal or
state law;
(2) has been found to have violated the insurance law of this state
with respect to any previous reports submitted under this chapter;
or
(3) has demonstrated a pattern or practice of failing to detect or
disclose material information in previous reports filed under this
chapter.
(d) The commissioner shall not recognize as a qualified independent
certified public accountant, or accept an annual audited financial report
prepared in whole or in part by an accountant that provides to a
domestic insurer, contemporaneously with the audit, any of the
following nonaudit services:
(1) Bookkeeping or other services related to the accounting
records or financial statements of the domestic insurer.
(2) Financial information systems design or implementation.
(3) Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports.
(4) Actuarially oriented advisory services involving the
determination of amounts recorded in the financial statements.
This does not include the following:
(A) The accountant assisting the domestic insurer to understand
the methods, assumptions, and inputs used in the determination
of amounts recorded in the financial statement if it is
reasonable to conclude that the assistance provided is not
subject to audit procedures during an audit of the domestic
insurer's financial statements.
(B) An accountant's actuary issuing an actuarial opinion or
certification concerning the domestic insurer's reserves if the
following apply:
(i) The accountant and the accountant's actuary have not
performed any management functions or made any
management decisions.
(ii) The domestic insurer has competent personnel, or
engages a third party actuary, to estimate the reserves for
which management takes responsibility.
(iii) The accountant's actuary tests the reasonableness of the
reserves after the domestic insurer's management has
determined the amount of the reserves.
(5) Internal audit outsourcing services.
(6) Management or human resources functions.
(7) Broker, dealer, investment adviser, or investment banking
services.
(8) Legal services or expert services unrelated to the audit.
(9) Any other services that the commissioner determines to be
impermissible in rules adopted under IC 4-22-2.
(e) In making a determination under subsection (d), the
commissioner shall generally consider whether the accountant's
independence has been impaired by any of the following, in which case
the commissioner shall not recognize the accountant or accept the
annual audited financial report from the accountant:
(1) Functioning in the role of management for the domestic
insurer.
(2) Auditing the accountant's own work.
(3) Serving as an advocate for the domestic insurer.
(f) The commissioner may conduct a hearing under IC 4-21.5 to
determine whether an independent auditor engaged by a domestic
insurer is sufficiently independent of that domestic insurer to be
capable of exercising independent judgment and expressing an
objective opinion on the financial statements in the annual financial
report filed by the insurer under this chapter. If the commissioner
determines that the auditor is not sufficiently independent of the
insurer, the commissioner shall require the insurer to replace the
auditor with another that is sufficiently independent of the insurer.