Virginia Administrative Code › Title 14 - INSURANCE › Agency 5 - STATE CORPORATION COMMISSION, BUREAU OF INSURANCE › Chapter 270 - RULES GOVERNING ANNUAL FINANCIAL REPORTING › Section 14VAC5-270-148 - Management's Report of Internal Control over Financial Reporting

Current through Register Vol. 40, No. 24, July 15, 2024
A. An insurer
				required to file an Audited Financial Report pursuant to this chapter that has
				annual direct written and assumed premiums, excluding premiums reinsured with
				the Federal Crop Insurance Corporation and Federal Flood Program, of $500
				million or more shall prepare a report of the insurer's or group of insurers'
				internal control over financial reporting. The report shall be filed with the
				commission along with the Communicating Internal Control Related Matters
				Identified in an Audit pursuant to
				14VAC5-270-120. Management's
				Report of Internal Control over Financial Reporting shall be as of the
				immediately preceding December 31.
B. Notwithstanding the premium threshold in
				subsection A of this section, the commission may require an insurer to file
				Management's Report of Internal Control over Financial Reporting if the insurer
				is in any RBC level event, or meets any one or more of the standards of an
				insurer deemed to be in hazardous financial condition pursuant to §§
				38.2-1038, 38.2-5505, 38.2-5506 and 38.2-5510 of the Code of
				Virginia.
C. An insurer or a group
				of insurers that is (i) directly subject to Section 404; (ii) part of a holding
				company system whose parent is directly subject to Section 404; (iii) not
				directly subject to Section 404 but is a SOX compliant entity; or (iv) 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
				those internal controls of the insurer or group of insurers having a material
				impact on the preparation of the insurer's or group of insurer's audited
				statutory financial statements (those items included in
				14VAC5-270-60 ) were included in
				the scope of the Section 404 Report. 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
				14VAC5-270-60 ) excluded from the
				Section 404 Report. If there are internal controls of the insurer or group of
				insurers that have a material impact on the preparation of the insurer's or
				group of insurer's 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 file (i) a Management's Report of Internal Control
				over Financial Reporting pursuant to this section, or (ii) the Section 404
				Report and a Management's Report of Internal Control over Financial Reporting
				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. Management's Report of Internal Control
				over Financial Reporting shall include:
1. A
				statement that management is responsible for establishing and maintaining
				adequate internal control over financial reporting;
2. A statement that management has
				established internal control over financial reporting and an assertion, to the
				best of management's knowledge and belief, after diligent inquiry, as to
				whether its internal control 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 control 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 control over financial
				reporting identified by management as of the immediately preceding December 31.
				Management shall not conclude that the internal control 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 control 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).