D.C. Mun. Regs. tit. 26, r. 26-A3702
Current through Register 71, No. 45, November 7, 2024
Rule 26-A3702 - ANNUAL AUDIT3702.1All captive insurance companies shall have an annual audit by an independent certified public accountant, authorized by the Commissioner and shall file such audited financial report with the Commissioner. A captive insurer not licensed as domestic risk retention group shall file its annual audited financial report on or before June 30 for the year ending December 31 immediately preceding. A captive insurer licensed as domestic risk retention groups shall file its annual audited financial report on or before June 1 for the year ending December 31 immediately preceding.
3702.2The annual audit report shall be considered part of the captive insurance company's annual report of financial condition except with respect to the date by which it must be filed with the Commissioner.
3702.3The annual audit shall consist of the following:
(a) Financial statements furnished pursuant to this section shall be examined by independent certified public accountants in accordance with generally accepted auditing standards as determined by the American Institute of Certified Public Accountants.(b) The opinion of the independent certified public accountant shall cover all years presented.(c) The opinion shall be addressed to the captive insurance company on stationery of the accountant showing the address of issuance, shall bear original manual signatures, and shall be dated.3702.4The annual audit report shall include an evaluation of the internal controls of the captive insurance company relating to the methods and procedures used in the securing of assets and the reliability of the financial records, including but not limited to such controls as the system of authorization and approval and the separation of duties.
3702.5The annual audit shall be conducted in accordance with generally accepted auditing standards.
3702.6The accountant shall furnish the company, for inclusion in the filing of the audited annual report, a letter stating:
(a) That it is independent with respect to the captive insurance company and conforms to the standards of the profession, as contained in the Code of Professional Ethics and pronouncements of the American Institute of Certified Public Accountants and pronouncements of the Financial Accounting Standards Board.(b) The general background and experience of the staff engaged in audit including the experience in auditing captives or other insurance companies.(c) That the accountant understands that the audited annual report and his opinions thereon will be filed in compliance with this regulation with the Department of Insurance and Securities Regulation.(d) That the accountant consents to the requirements of § 3705 of this regulation and that the accountant consents and agrees to make available for review by the Commissioner, his designee or his appointed agent, the work papers as defined in § 3705.(e) That the accountant is property licensed by an appropriate District or state licensing authority and that he is a member in good standing in the American Institute of Certified Public Accountants.3702.7The annual audit shall include the following financial statements:
(b) Statement of operations;(c) Statement of changes in financial position;(d) Statement of changes in capital paid up, gross paid in and contributed surplus and unassigned funds (surplus); and(e) Notes to financial statements, which shall include those that are required by generally accepted accounting principles, including:1. A reconciliation of differences, if any, between the audited financial report and the statement or form filed with the Commissioner;2. A summary of ownership and relationship of the company and all affiliated corporations or companies insured by the captive; and3. A narrative explanation of all material transactions and balances with the company.3702.8The annual audit shall include an opinion as to the adequacy of the captive insurance company's loss reserves and loss expense reserves. The audit of the adequacy of the captive insurance company's life, health, disability and annuity loss reserves and loss expense reserves for a captive insurance company insuring employee benefit risks shall be performed by a life actuary. The individual who certifies as to the adequacy of reserves shall be approved by the Commissioner and shall be a Fellow of the Casualty Actuarial Society, a member in good standing of the American Academy of Actuaries, or an individual who has demonstrated his competence in loss reserve evaluation to the Commissioner.
3702.9The certification in Subsection 3702.8 shall be in such form as the Commissioner deems appropriate.
D.C. Mun. Regs. tit. 26, r. 26-A3702
Final Rulemaking published at 48 DCR 8034(August 24, 2001); as amended by Final Rulemaking published at 59 DCR 13088 (November 16, 2012)Authority: Section 22 of the Captive Insurance Company Act of 2004, effective March 17, 2005 (D.C. Law 15-262; D.C. Official Code § 31-3931.21 (2011 Repl.)).