§ 26-3-306 — Qualifications of independent certified public accountant

Wyoming § 26-3-306

• Jurisdiction: Wyoming
• Title 26: Insurance Code
• Ch. 3: AUTHORIZATION OF INSURERS AND

Text

(a) The commissioner shall not recognize any person or
firm as a qualified independent certified public accountant if
that person or firm:
(i) Is not in good standing with the American
Institute of Certified Public Accountants and in all states in
which the accountant is licensed to practice, or, for a Canadian
or British company, that is not a chartered accountant; or
(ii) Has either directly or indirectly entered into
an agreement of indemnification with respect to the audit of the
insurer.
(b) Except as otherwise provided in this section, the
commissioner shall recognize an independent certified public
accountant as qualified as long as he conforms to the standards
of his profession, as contained in the code of professional
ethics of the American Institute of Certified Public Accountants
and rules and regulations and code of ethics and rules of
professional conduct of the Wyoming board of certified public
accountants, or similar code.
(c) After January 1, 2010, the lead or coordinating audit
partner having primary responsibility for the audit shall not
act in that capacity for more than five (5) consecutive years.
The person shall be disqualified from acting in that or a
similar capacity for the same company or its insurance
subsidiaries or affiliates for a period of five (5) consecutive
years. An insurer may make application to the commissioner for
relief from the rotation requirement on the basis of unusual
circumstances. This application shall be made at least thirty
(30) days before the end of the calendar year. The insurer
shall file with its annual statement, the approval for relief
pursuant to this subsection with the states in which it is
licensed or doing business and with the NAIC. If the
nondomestic state accepts electronic filing with the NAIC, the
insurer shall file the approval in an electronic format
acceptable to the NAIC. The commissioner may consider the
following factors in determining whether the relief should be
granted:
(i) Number of partners, expertise of the partners or
the number of insurance clients in the currently registered
firm;
(ii) Premium volume of the insurer; or
(iii) Number of jurisdictions in which the insurer
transacts business.
(d) The commissioner shall neither recognize as a
qualified independent certified public accountant, nor accept
any annual audited financial report, prepared in whole or in
part by, any natural person who:
(i) Has been convicted of fraud, bribery, a violation
of the Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. Sections 1961 through 1968, or any dishonest conduct or
practices under federal or state law;
(ii) Has been found to have violated the insurance
laws of this state with respect to any previous reports
submitted under this article; or
(iii) Has demonstrated a pattern or practice of
failing to detect or disclose material information in previous
reports filed under the provisions of this article.
(e) The commissioner may hold a hearing to determine
whether an independent certified public accountant is qualified
and, considering the evidence presented, may rule that the
accountant is not qualified for purposes of expressing his
opinion on the financial statements in the annual audited
financial report made pursuant to this article and require the
insurer to replace the accountant with another whose
relationship with the insurer is qualified within the meaning of
this article.
(f) A qualified independent certified public accountant
may enter into an agreement with an insurer to have disputes
relating to an audit resolved by mediation or arbitration.
However, in the event of a delinquency proceeding commenced
against the insurer under chapter 28 of this code, the mediation
or arbitration provisions shall operate at the option of the
statutory successor.
(g) The commissioner shall neither recognize as a
qualified independent certified public accountant, nor accept an
annual audited financial report, prepared in whole or in part by
an accountant who provides to an insurer, contemporaneously with
the audit, the following nonaudit services:
(i) Bookkeeping or other services related to the
accounting records or financial statements of the insurer;
(ii) Financial information systems design and
implementation;
(iii) Appraisal or valuation services, fairness
opinion or contribution-in-kind reports;
(iv) Actuarially-oriented advisory services involving
the determination of amounts recorded in the financial
statements. The accountant may assist an insurer in
understanding the methods, assumptions and inputs used in the
determination of amounts recorded in the financial statement
only if it is reasonable to conclude that the services provided
will not be subject to audit procedures during an audit of the
insurer's financial statements. An accountant's actuary may
also issue an actuarial opinion or certification on an insurer's
reserves if the following conditions have been met:
(A) Neither the accountant nor the accountant's
actuary has performed any management functions or made any
management decisions;
(B) The insurer has competent personnel or
engages a third party actuary to estimate the reserves for which
management takes responsibility; and
(C) The accountant's actuary tests the
reasonableness of the reserves after insurer's management has
determined the amount of the reserves.
(v) Internal audit outsourcing services;
(vi) Management functions or human resources;
(vii) Broker or dealer, investment adviser or
investment banking services;
(viii) Legal services or expert services unrelated to
the audit; or
(ix) Any other services that the commissioner
determines by regulation to be impermissible. In determining
whether other services are impermissible, the commissioner shall
consider the principle that the accountant may not function in
the role of management, may not audit his own work and may not
serve in an advocacy role for the insurer.
(h) Insurers having direct written and assumed premiums of
less than one hundred million dollars ($100,000,000.00) in any
calendar year may request an exemption from subsection (g) of
this section. The insurer shall file with the commissioner a
written statement discussing the reasons why the insurer should
be exempt from subsection (g) of this section. If the
commissioner finds, upon review of the statement, that
compliance with subsection (g) of this section would constitute
a financial or organizational hardship on the insurer, an
exemption may be granted.
(j) A qualified independent certified public accountant
who performs the audit may engage in other nonaudit services,
including tax services, that are not described in subsection (g)
of this section or that do not conflict with paragraph (g)(ix)
of this section only if the activity is approved in advance by
the audit committee in accordance with subsection (k) of this
section.
(k) All auditing services and nonaudit services provided
to an insurer by the qualified independent certified public
accountant of the insurer shall be preapproved by the audit
committee. The preapproval requirement shall be waived with
respect to nonaudit services if the insurer is a SOX compliant
entity or a direct or indirect wholly-owned subsidiary of a SOX
compliant entity or if:
(i) The aggregate amount of all nonaudit services
provided to the insurer constitutes not more than five percent
(5%) of the total amount of fees paid by the insurer to its
qualified independent certified public accountant during the
fiscal year in which the nonaudit services are provided;
(ii) The services were not recognized by the insurer
at the time of the engagement to be nonaudit services; and
(iii) The services are promptly brought to the
attention of the audit committee and approved prior to the
completion of the audit by the audit committee or by one (1) or
more members of the audit committee who are the members of the
board of directors to whom authority to grant such approvals has
been delegated by the audit committee.
(m) The audit committee may delegate to one (1) or more
designated members of the audit committee the authority to grant
the preapprovals required under subsection (k) of this section.
The decisions of any member to whom this authority is delegated
shall be presented to the full audit committee at each of its
scheduled meetings.
(n) The commissioner shall not recognize an independent
certified public accountant 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 position for that
insurer was employed by the independent certified public
accountant and participated in the audit of that insurer during
the one (1) year period preceding the date that the most current
statutory opinion is due. This subsection shall only apply to
partners and senior managers involved in the audit. An insurer
may make application to the commissioner for relief from this
subsection on the basis of unusual circumstances. The insurer
shall file with its annual statement filing the approval for
relief under this subsection with the states that it is licensed
in or doing business in and with the NAIC. If the nondomestic
state accepts electronic filing with the NAIC, the insurer shall
file the approval in an electronic format acceptable to the
NAIC.