Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-141 - ANNUAL FINANCIAL REPORTING › Section 482-1-141-.14 - Requirements For Audit Committees

Current through Register Vol. 42, No. 9, June 28, 2024
(1) The 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) for the purpose of preparing or
			 issuing the audited financial report or related work pursuant to this chapter.
			 Each accountant shall report directly to the audit committee.
(2) The audit committee of an insurer or
			 group of insurers shall be responsible for overseeing the insurer's Internal
			 audit function and granting the person or persons performing the function
			 suitable authority and resources to fulfill their responsibilities if required
			 by Rule 482-1-141-.15.
(3) 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 paragraph (6) of this rule and
			 paragraph (3) of Rule
			 482-1-141-.03.
(4) In order to be considered independent for
			 purposes of this section, a member of the audit committee may not, other than
			 in his or her 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 subsidiary thereof. However, if a law requires board participation by
			 otherwise non-independent members, that law shall prevail and such 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 of its affiliates.
(5) 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
			 year from the occurrence of the event that caused the member to be no longer
			 independent.
(6) To exercise the
			 election of the controlling person to designate the audit committee for
			 purposes of this regulation, 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 can 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.
(7)
(a) The
			 audit committee shall require the accountant that performs for an insurer any
			 audit required by this regulation to timely report to the audit committee in
			 accordance with the requirements of SAS 61,
Communication with Audit
			 Committees,
or its replacement, including all of the following:
1. All significant accounting policies and
			 material permitted practices;
2.
			 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
3. Other material written communications
			 between the accountant and the management of the insurer, such as any
			 management or schedule of unadjusted differences.