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31.05.11.00.htm 31.05.11.00. Title 31 MARYLAND INSURANCE ADMINISTRATION Subtitle 05 ASSETS, LIABILITIES, RESERVES, AND INVESTMENTS OF INSURERS Chapter 11 Annual Financial Reporting Authority: Insurance Article, §2-109(a)1) 2-205, 4-116, 14-118, 14-121, 14-413, 15-605, 24-211, and24-304, Annotated Code of Maryland
31.05.11.01.htm 31.05.11.01. 01 Purpose and Scope.. A. Purpose. The purpose of this chapter is to improve the Maryland Insurance Administration's surveillance of the financial condition of insurers by requiring:1) An annual audit of financial statements reporting the financial position and the results of operations of insurers by independent certified public accountants;2) Communication of Internal Control Related Matters Noted in an Audit; and.
31.05.11.02.htm 31.05.11.02. 02 Definitions.. A. In this chapter, the following terms have the meanings indicated.. B. Terms Defined.. 1) "Accountant" or "independent certified public accountant" means:. a) An independent certified public accountant or accounting firm in good standing with the American Institute of Certified Public Accountants (AICPA) and in all states in which the accountant is licensed to practice; and
31.05.11.03.htm 31.05.11.03. 03 Filing and Extensions for Filing Audited Financial Reports; Audit Committee Appointment.. A. Insurers shall have an annual audit by an independent certified public accountant, and shall file an audited financial report with the Commissioner for the year ended December 31 immediately preceding, for:1) Nonprofit health service plans, on or before March 1 of each year;. 2) Dental plan organizations, on or before April 1 of each year;. 3) Health maintenance org
31.05.11.04.htm 31.05.11.04. 04 Contents of Annual Audited Financial Report.. A. The annual audited financial report shall report the financial position of the insurer as of the end of the most recently ended calendar year and the results of its operations, cash flows, and changes in capital and surplus for the year then ended in conformity with statutory accounting practices prescribed, or otherwise permitted, by the department of insurance of the state of domicile.
31.05.11.05.htm 31.05.11.05. 05 Designation of Independent Certified Public Accountant.. A. An insurer required by this chapter to file an annual audited financial report shall, within 60 days after becoming subject to the requirement:1) Register with the Commissioner in writing the name and address of the independent certified public accountant or accounting firm retained to conduct the annual audit set forth in this regulation; or2) Register the name and address of their retained independent certified pu
31.05.11.06.htm 31.05.11.06. 06 Qualifications of Independent Certified Public Accountant.. A. The Commissioner may not recognize a person or firm as a qualified independent certified public accountant if the person or firm:1) Is not in good standing with the American Institute of Certified Public Accountants (AICPA) and in all states in which the accountant is licensed to practice, or, for a Canadian or British company, that is not a chartered accountant; or2) Has either directly or indirectly entered into
31.05.11.07.htm 31.05.11.07. 07 Consolidated or Combined Audits.. A. An insurer may make written application to the Commissioner for approval to file audited consolidated or combined financial statements in lieu of separate annual audited financial statements if the insurer is part of a group of insurance companies that utilizes a pooling or 100 percent reinsurance agreement that affects the solvency and integrity of the insurer's reserves, and the insurer cedes all of its direct and assumed business to the poo
31.05.11.08.htm 31.05.11.08. 08 Scope of Audit and Report of Independent Certified Public Accountant.. A. Financial statements furnished pursuant to Regulation .04 of this chapter shall be examined by the independent certified public accountant. The audit of the insurer's financial statements shall be conducted in accordance with generally accepted auditing standards.B. The independent certified public accountant shall obtain an understanding of internal control sufficient to plan the audit
31.05.11.09.htm 31.05.11.09. 09 Notification of Adverse Financial Condition.. A. The insurer required to furnish the annual audited financial report shall require the independent certified public accountant to report, in writing, within 5 business days to the board of directors or its audit committee any determination by the independent certified public accountant that the insurer has materially misstated its financial condition as reported to the Commissioner as of the balance sheet date currently
31.05.11.10.htm 31.05.11.10. 10 Communication of Internal Control Related Matters Noted in an Audit.. A. In addition to the annual audited financial report, each insurer shall furnish the Commissioner with a written communication as to any unremediated material weaknesses in its internal control over financial reporting noted during the audit.B. The communication in §A of this regulation, shall be prepared by the accountant within 60 days after the filing of the annual audited financial rep
31.05.11.11.htm 31.05.11.11. 11 Accountant's Letter of Qualifications.. A. The accountant shall furnish the insurer in connection with, and for inclusion in, the filing of the annual audited financial report, a letter as provided in §B of this regulation.B. The letter shall state:. 1) That the accountant is independent with respect to the insurer, and conforms to the standards of the accountant's profession as contained in:a) The Code of Professional Ethics and pronouncements of the AICPA; and.
31.05.11.12.htm 31.05.11.12. 12 Definition, Availability, and Maintenance of Independent Certified Public Accountant's Workpapers.A. An insurer required to file an audited financial report pursuant to this chapter shall require the accountant to make available for review by the Maryland Insurance Administration examiners, all workpapers prepared in the conduct of the accountant's audit, and any communications related to the audit between the accountant and the insurer, at the offices of the insurer,
31.05.11.13.htm 31.05.11.13. 13 Requirements for Audit Committees.. A. This regulation does not apply to:. 1) Foreign or alien insurers licensed in Maryland;. 2) An insurer that is a SOX compliant entity; or. 3) 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 financ
31.05.11.14.htm 31.05.11.14. 14 Internal Audit Function Requirements.. A. An insurer is exempt from the requirements of this section if:. 1) The insurer has annual direct written and unaffiliated assumed premium, including international direct and assumed premium but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and2) The insurer is a member of a group of insurers and the group has annual direct written and unaffi
31.05.11.15.htm 31.05.11.15. 15 Conduct of Insurer in Connection with the Preparation of Required Reports and Documents.. A. A director or officer of an insurer may not, directly or indirectly:. 1) Make or cause to be made a materially false or misleading statement to an accountant in connection with any audit, review, or communication required under this chapter; or2) Omit to state, or cause another person to omit to state, any material fact necessary in order to make statements made, in
31.05.11.16.htm 31.05.11.16. 16 Management's Report on Internal Control over Financial Reporting.. 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 $500,000,000 or more shall prepare a report (Management's Report on Internal Control over Financial Reporting) of the insurer's or group of insurers' internal c
31.05.11.17.htm 31.05.11.17. 17 Exemptions and Effective Dates.. A. Upon written application of any insurer, the Commissioner may grant an exemption from compliance with provisions of this chapter if:1) The exemption is not prohibited by statute; and. 2) The Commissioner finds, upon review of the application, that compliance with this chapter would constitute a financial or organizational hardship upon the insurer.B. The Commissioner may grant exemption at any time and from time to time f
31.05.11.18.htm 31.05.11.17. 17 Canadian and British Companies.. A. In the case of Canadian and British insurers, the annual audited financial report shall be defined as the annual statement of total business on the form filed by such companies with their supervision authority duly audited by an independent chartered accountant.B. For such insurers, the letter required in Regulation .05B of this chapter shall state that the accountant is aware of the requirements relating to the annual audited financ
31.05.11.9999.htm 31.05.11.9999. Administrative History Effective date: August 10, 2009 (36:16 Md. R. 1252). Regulation .02B amended effective February 27, 2017 (44:4 Md. R. 255) ―. Chapter revised effective December 6, 2018 (45:24 Md. R. 1163).
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