Nevada Administrative Code › Chapter 694C - Captive Insurers › ADMINISTRATION › Section 694C.210 - Annual audit

Current through June 11, 2024
1. Except as
			 otherwise provided in subsection 2 or 7, a captive insurer shall have an annual
			 audit by an independent certified public accountant who is authorized by the
			 Commissioner to conduct the audit. The captive insurer shall file the audited
			 financial report with the Commissioner on or before June 30 for the year ending
			 on the immediately preceding December 31.
2. Unless exempted pursuant to subsection 7
			 or NAC 680A.172,
			 680A.199 or
			 680A.205, a state-chartered risk
			 retention group shall have an annual audit pursuant to NAC
			 680A.172 to
			 680A.211, inclusive. Unless the
			 Commissioner grants an extension pursuant to subsection 5 or NAC
			 680A.177, a state-chartered risk
			 retention group shall file the audited financial report with the Commissioner
			 on or before June 1 for the year ending on the immediately preceding December
			 31.
3. The Commissioner will deem
			 the annual audit conducted pursuant to this section to be a part of the annual
			 report of financial condition of the captive insurer which is filed pursuant to
			 NRS
			 NRS
			 694C.400.
4. The annual audit required by this section
			 must include:
(a) A statement, prepared by the
			 independent certified public accountant who conducted the audit, certifying
			 that all financial requirements established by law, the articles of
			 incorporation, the bylaws and the business plan of the captive insurer have
			 been met.
(b) The opinion of the
			 independent certified public accountant who conducted the audit which states
			 that the financial statements of the captive insurer were examined in
			 accordance with generally accepted auditing standards, as determined by the
			 American Institute of Certified Public Accountants and included in the
			 publication AICPA Professional Standards , which is adopted by reference in NAC
			 694C.090. The opinion must:
(1) Cover all years presented in the
			 audit;
(2) Be addressed to the
			 captive insurer on stationery of the accountant; and
(3) Include the address of the accountant
			 issuing the opinion, original manual signatures and the date on which the
			 opinion was issued.
(c)
			 A report of an evaluation of the internal controls of the captive insurer
			 relating to:
(1) The methods and procedures
			 used in the securing of assets; and
(2) The reliability of the financial records
			 of the captive insurer, including, without limitation, the controls for the
			 system of authorization and approval, and the separation of duties.
(d) A letter from the independent
			 certified public accountant which includes:
(1) A statement that the accountant is
			 independent with respect to the captive insurer and that he or she conforms to
			 the standards of his or her profession as set forth in the AICPA Professional
			 Standards , published by the American Institute of Certified Public
			 Accountants, and adopted by reference in NAC
			 694C.090, and the pronouncements
			 of the Financial Accounting Standards Board;
(2) A general description of the background
			 and experience of the staff of the accountant engaged in the audit, including
			 the experience of the staff in auditing captive insurers and other insurance
			 companies;
(3) A statement that the
			 accountant understands that the audited annual report and his or her opinions
			 thereon will be filed with the Commissioner pursuant to subsection 1;
(4) A statement that the accountant will
			 comply with NAC
			 694C.230 and consents and agrees
			 to make his or her work papers available for review by the Commissioner or a
			 designee thereof; and
(5) A
			 statement that the accountant is properly licensed by the appropriate state
			 licensing authority and is a member in good standing of the American Institute
			 of Certified Public Accountants.
(e) Financial statements, including:
(1) A balance sheet;
(2) A statement of gain or loss from
			 operations;
(3) A statement of
			 changes in financial position;
(4)
			 A statement of changes in paid-up capital, gross paid-in contributed surplus
			 and unassigned money or assets; and
(5) Notes to financial statements required by
			 generally accepted accounting principles, or as required by any other
			 comprehensive basis of accounting in use by the captive insurer and approved by
			 the Commissioner, including:
(I) A
			 reconciliation of differences, if any, between the audited financial report and
			 the report filed with the Commissioner pursuant to
			 NRS
			 694C.400, with a written description of the
			 nature of these differences;
(II) A
			 summary of ownership and relationships of the company and all affiliated
			 corporations or companies insured by the captive insurer; and
(III) A narrative explanation of all material
			 transactions and balances with the captive insurer.
(f) An annual actuarial
			 certification of loss reserves and loss expense reserves which includes an
			 opinion of the adequacy of the loss reserves and loss expense reserves of the
			 captive insurer, in a format acceptable to the Commissioner. The person who
			 certifies the adequacy of the reserves must be approved by the Commissioner and
			 must be a Fellow of the Casualty Actuarial Society, a Fellow of the Society of
			 Actuaries, a member in good standing of the American Academy of Actuaries or a
			 person who has otherwise demonstrated competence in the evaluation of loss
			 reserves to the Commissioner. The annual actuarial certification must be in
			 such form as the Commissioner determines appropriate.