Section R590-238-5 - Annual Audit(1) A company shall have an annual audit by an independent certified public accountant, approved by the commissioner, and shall file the annual audit report with the commissioner on or before June 30 for the preceding year.(2) The annual audit report is part of the company's annual report of financial condition except for the date by which it must be filed with the commissioner.(3) The annual audit report shall include: (a) an opinion of an independent certified public accountant that:(i) includes financial statements examined by the independent certified public accountant in accordance with GAAP, as determined by the AICPA;(ii) covers all years presented; and(iii) is on the accountant's stationery showing the address of issuance, date of issuance, and bearing original signatures;(b) a report of evaluation of internal controls, including: (i) an evaluation of the methods and procedures used in the securing of assets and the reliability of the financial records, including controls of the system of authorization and approval, and the separation of duties; and(ii) a review conducted in accordance with GAAP and filed with the commissioner;(c) an accountant's letter furnished to the company, for inclusion in the filing of the audited annual report, stating:(i) that the accountant is independent from the company and conforms to the standards of the accountant's profession as contained in the Code of Professional Ethics and pronouncements of the AICPA and pronouncements of the Financial Accounting Standards Board;(ii) the general background and experience of the staff engaged in the audit, including their experience in auditing captive or other insurance companies;(iii) that the accountant understands that the audited annual report and the accountant's opinions thereon will be filed in compliance with this rule;(iv) that the accountant consents to the requirements of Section R590-238-9;(v) that the accountant consents and agrees to make the work papers available for review by the commissioner, the commissioner's designee, or the commissioner's appointed agent; and(vi) that the accountant is properly licensed by an appropriate state licensing authority;(d) financial statements, including: (ii) a statement of gain or loss from operations;(iii) a statement of changes in financial position;(iv) a statement of cash flow;(v) a statement of changes in capital paid up, gross paid in, and contributed surplus and unassigned funds; and(vi) notes to financial statements required by GAAP, including: (A) a reconciliation of any differences between the audited financial report and the statement or form filed with the commissioner;(B) a summary of ownership and relationship of the company and all affiliated corporations or companies insured by the captive; and(C) a narrative explanation of each material transaction with the company that involves 3% or more of a company's assets as of the December 31 next preceding; and(e) a certification of loss reserves and loss expense reserves of the company's opining actuary, including: (i) an actuarial opinion of the reasonableness of the company's loss reserves and loss expense reserves, unless waived by the commissioner; and(ii) a certification by the individual who certifies the reasonableness of reserves.(4) The actuary who certifies the reasonableness of reserves under Subsection (3)(e) shall be: (a) approved by the commissioner;(b) a member in good standing of the American Academy of Actuaries; and(c) a fellow or an associate of:(i) the Casualty Actuarial Society, for property and casualty companies; or(ii) the Society of Actuaries, for life and health companies.(5) A certification under Subsection (3)(e) shall be in a form prescribed by the commissioner.Utah Admin. Code R590-238-5
Amended by Utah State Bulletin Number 2015-20, effective 9/25/2015Adopted by Utah State Bulletin Number 2024-01, effective 12/22/2023Amended by Utah State Bulletin Number 2024-18, effective 9/10/2024