§ 26-3-315 — Requirements for audit committees

Wyoming § 26-3-315

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

Text

(a) An audit committee shall be directly responsible for
the appointment, compensation and oversight of the work of any
accountant, including resolution of disagreements between
management and the accountant regarding financial reporting,
employed for the purpose of preparing or issuing the audited
financial report or related work pursuant to this article and
each accountant shall report directly to the audit committee.
(b) The audit committee of an insurer or group of insurers
shall be responsible for overseeing the insurer's internal audit
function and granting the persons performing the function
suitable authority and resources to fulfill their
responsibilities if required by W.S. 26-3-316.
(c) Each member of the audit committee shall be a member
of the board of directors of the insurer or a member of the
board of directors of an entity elected pursuant to W.S.
26-3-302(a)(vi) and subsection (f) of this section.
(d) In order to be considered independent for purposes of
this section, a member of the audit committee shall not, other
than in his capacity as a member of the audit committee, the
board of directors or any other board committee, accept any
consulting, advisory or other compensatory fee from the entity
or be an affiliated person of the entity or any subsidiary
thereof. If any other provision of law requires board
participation by otherwise nonindependent members, that law
shall prevail and those members may participate in the audit
committee and be designated as independent for audit committee
purposes unless they are an officer or employee of the insurer
or one (1) of its affiliates.
(e) If a member of the audit committee ceases to be
independent for reasons outside the member's reasonable control,
that person, with notice by the responsible entity to the state,
may remain an audit committee member of the responsible entity
until the earlier of the next annual meeting of the responsible
entity or one (1) year from the occurrence of the event that
caused the member to be no longer independent.
(f) To exercise the election of the controlling person to
designate the audit committee for purposes of this article, the
ultimate controlling person shall provide written notice to the
commissioners of the affected insurers. Notification shall be
made timely prior to the issuance of the statutory audit report
and include a description of the basis for the election. The
election may be changed through notice to the commissioner by
the insurer which shall include a description of the basis for
the change. The election shall remain in effect for perpetuity,
until rescinded.
(g) The audit committee shall require the accountant that
performs for an insurer any audit required by this article to
timely report to the audit committee in accordance with the
requirements of Statement on Auditing Standards 61,
Communication with Audit Committees, or its replacement,
including:
(i) All significant accounting policies and material
permitted practices;
(ii) All material alternative treatments of financial
information within statutory accounting principles that have
been discussed with management officials of the insurer,
ramifications of the use of the alternative disclosures and
treatments and the treatment preferred by the accountant; and
(iii) Other material written communications between
the accountant and the management of the insurer, such as any
management letter or schedule of unadjusted differences.
(h) If an insurer is a member of an insurance holding
company system, the reports required under subsection (g) of
this section may be provided to the audit committee on an
aggregate basis for insurers in the holding company system,
provided that any substantial differences among insurers in the
system are identified to the audit committee.
(j) The proportion of independent audit committee members
shall meet or exceed the following criteria, except that the
commissioner has authority afforded by state law to require the
entity's board to enact improvements to the independence of the
audit committee membership if the insurer is in any RBC action
level event, meets one (1) or more of the standards of an
insurer deemed to be in hazardous financial condition or
otherwise exhibits qualities of a troubled insurer:
(i) For insurers with prior calendar year direct
written and assumed premiums of five hundred million dollars
($500,000,000.00) or less the audit committee shall have a
majority of members that are independent and the insurers are
encouraged to structure their audit committees with at least
seventy-five percent (75%) of the audit committee members being
independent;
(ii) For insurers with prior calendar year direct
written and assumed premiums of more than five hundred million
dollars ($500,000,000.00) at least seventy-five percent (75%) of
the members of the audit committee shall be independent;
(iii) For purposes of this subsection, prior calendar
year direct written and assumed premiums shall be the combined
total of direct premiums and assumed premiums from nonaffiliates
for the reporting entities.
(k) An insurer with direct written and assumed premiums,
excluding premiums reinsured with the federal crop insurance
corporation and federal flood program, less than five hundred
million dollars ($500,000,000.00) may make application to the
commissioner for a waiver from the requirements of this section
based on hardship. The insurer shall file, with its annual
statement filing, the approval for relief from this section with
the states that it is licensed in or doing business in and the
National Association of Insurance Commissioners. If the
nondomestic state accepts electronic filing with the NAIC, the
insurer shall file the approval in an electronic format
acceptable to the NAIC.
(m) This section shall not apply to foreign or alien
insurers licensed in this state or an insurer that is a SOX
compliant entity or a direct or indirect wholly-owned subsidiary
of a SOX compliant entity, as defined in W.S. 26-3-302(a)(xiii).
(n) An insurer or group of insurers that is not required
to have independent audit committee members or only a majority
of independent audit committee members because the total written
and assumed premium is below the threshold and subsequently
becomes subject to any of the independence requirements due to
changes in premiums shall have one (1) year following the year
the threshold is exceeded to comply with the independence
requirements. An insurer that becomes subject to any of the
independence requirements as a result of a business combination
shall have one (1) calendar year following the date of
acquisition or combination to comply with the independence
requirements.