Oklahoma Administrative Code › Title 365 - Insurance Department › Chapter 25 - Other Licensees › Subchapter 7 - Companies › Part 19 - ANNUAL FINANCIAL REPORTING › Section 365:25-7-113 - Requirements for audit committees

Current through Vol. 41, No. 20,
				  July 1, 2024
(a) 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.
(b) 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.
(c) 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 365:25-7-114 of this regulation.
(d) 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 subsection f and 365:25-7-102(c).
(e) 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.
(f) 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.
(g) 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.
(h)
[RESERVED]
(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:
(A) All significant accounting policies and
				  material permitted practices;
(B)
				  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
(C) Other material written communications
				  between the accountant and the management of the insurer, such as any
				  management letter or schedule of unadjusted differences.