Connecticut Administrative Code › Title 38a - Insurance Department › 54 - Annual Audited Financial Reports › Section 38a-54-11c - Management's report of internal control over financial reporting

Current through July 10, 2024
(a) Each insurer required to file an audited
			 financial report pursuant to Sections
			 38a-54-1
			 through
			 38a-54-14,
			 inclusive, of the Regulations of the Connecticut State Agencies that has annual
			 direct written and assumed premiums, excluding premiums reinsured with the
			 Federal Crop Insurance Corporation and Federal Flood Program, of $500,000,000
			 or more shall prepare a report of the insurer's or group of insurers' internal
			 control over financial reporting, as these terms are defined in Section
			 38a-54-2. The report
			 shall be filed with the Commissioner along with the Communication of Internal
			 Control Related Matters Noted in an Audit described under Section
			 38a-54-9
			 a of the Regulations of Connecticut State Agencies. The Management's Report of
			 Internal Control Over Financial Reporting shall be as of December 31
			 immediately preceding.
(b)
			 Notwithstanding the premium threshold in subsection (a) of this section, the
			 Commissioner may require an insurer to file a Management's Report of Internal
			 Control over Financial Reporting if the insurer is in a risk-based capital
			 level event, or meets any one or more of the standards of an insurer deemed to
			 be in hazardous financial condition as defined in Sections
			 38a-8-101 to
			 38a-8-104,
			 inclusive, 38a-72-1 to 38a-72-13, inclusive, and 38a-193-1 to 38a-193-13,
			 inclusive, of the Regulations of the Connecticut State Agencies.
(c) An insurer or a group of insurers that is
			 (1) directly subject to Section 404; (2) part of a holding company system whose
			 parent is directly subject to Section 404; (3) not directly subject to Section
			 404 but is a SOX compliant entity; or (4) a member of a holding company system
			 whose parent is not directly subject to Section 404 but is a SOX compliant
			 entity, may file its or its parent's Section 404 Report and an addendum in
			 satisfaction of this section's requirement, provided that the internal controls
			 of the insurer or group of insurers having a material impact on the preparation
			 of the insurer's or group of insurers' audited statutory financial statements
			 (those items included in Section
			 38a-54-4
			 of the Regulations of Connecticut State Agencies) were included in the scope of
			 Section 404 Reports. The addendum shall be a positive statement by management
			 that there are no material processes with respect to the preparation of the
			 insurer's or group of insurers' audited statutory financial statements (those
			 items included in Section
			 38a-54-4
			 of the Regulations of Connecticut State Agencies) excluded from the Section 404
			 Report. If there are internal controls of the insurer or group of insurers or
			 that have a material impact on the preparation of the insurer's or group of
			 insurers' audited statutory financial statements and those internal controls
			 were not included in the scope of the Section 404 Report, the insurer or group
			 of insurers may either file a report pursuant to this section or a Section 404
			 Report and a report pursuant to this section for those internal controls that
			 have a material impact on the preparation of the insurer's or group of
			 insurers' audited statutory financial statements not covered by the Section 404
			 Report.
(d) The Management's Report
			 of Internal Control Over Financial Reporting shall include:
(1) A statement that management is
			 responsible for establishing and maintaining adequate internal controls over
			 financial reporting;
(2) A
			 statement that management has established internal controls over financial
			 reporting and an assertion, to the best of management's knowledge and belief,
			 after diligent inquiry, as to whether its internal controls over financial
			 reporting is effective to provide reasonable assurance regarding the
			 reliability of financial statements in accordance with statutory accounting
			 principles;
(3) A statement that
			 briefly describes the approach or processes by which management evaluated the
			 effectiveness of its internal controls over financial reporting;
(4) A statement that briefly describes the
			 scope of work that is included and whether any internal controls were
			 excluded;
(5) Disclosure of any
			 unremediated material weaknesses in the internal controls over financial
			 reporting identified by management as of December 31 immediately preceding.
			 Management shall not conclude that the internal controls over financial
			 reporting is effective to provide reasonable assurance regarding the
			 reliability of financial statements in accordance with statutory accounting
			 principles if there is one or more unremediated material weaknesses in its
			 Internal controls over financial reporting;
(6) A statement regarding the inherent
			 limitations of internal control systems; and
(7) Signatures of the chief executive officer
			 and the chief financial officer or equivalent position or title.