Compilation of Rules and Regulations of the State of Georgia › Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER › Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE › Subject 120-2-60 - CPA ANNUAL AUDITED FINANCIAL REPORTS › Rule 120-2-60-.14 - Requirements for Audit Committees

Current through Rules and Regulations filed through June 27, 2024
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.
(a) 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
				regulation. 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 person or persons performing
				the function suitable authority and resources to fulfill their responsibilities
				if required by
				120-2-60-.15 of this
				regulation.
(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 paragraph (f)
				and 120-2-60-.03(3).
(d) 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 any subsidiary thereof. However, if 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.
(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
				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 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.
(g)
(1) 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:
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.