The Vermont Statutes Online
Subchapter 007 : Examination and Reports(Cite as: 8 V.S.A. § 3579)
§ 3579. Qualified accountants
(a) A certified public accountant retained to perform audits of an insurer pursuant to the annual financial reporting rule adopted by the Commissioner under section 3578a of this title:
(1) shall be a member in good standing of the American Institute of Certified Public Accountants and in all states in which the accountant is licensed, or, for a Canadian or British company, be a chartered accountant;
(2) shall be independent with respect to the insurer;
(3) shall conform to the standards of the profession as contained in the code of professional ethics of the American Institute of Certified Public Accountants and of the Vermont Board of Public Accountancy or similar codes governing such accountant's professional conduct or ethics;
(4) shall not directly or indirectly enter into an agreement of indemnification or release from liability with respect to the insurer being audited where the intent or effect is to shift or limit in any manner the potential liability of the person or firm for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing or other misrepresentations made by the insurer or its representatives; and
(5) may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration; provided, however, in the event of a delinquency proceeding commenced against the insurer under chapter 145 of this title, the mediation or arbitration provisions shall operate at the option of the statutory successor.
(b) A domestic insurer required to be audited pursuant to the annual financial reporting rule adopted by the Commissioner under section 3578a of this title shall register with the Commissioner the name and address of the certified public accountant retained in compliance with this section and pay a registration fee of $100.00. If the Commissioner determines that a report filed by a foreign or alien insurer under subsection 3578(f) of this title is not substantially similar to the requirements imposed by the annual financial reporting rule adopted by the Commissioner under section 3578a of this title, the foreign or alien insurer shall, within 30 days of such determination, register the name and address of the certified public accountant retained in compliance with this section and pay a registration fee of $100.00. The notice of registration shall include the accountant's statement that the accountant:
(1) meets the requirements of this section;
(2) is familiar with the insurance laws of the insurer's state of domicile that relate to accounting and financial matters;
(3) will express his or her opinion on whether the financial statements conform to the statutory accounting practices prescribed or permitted by the Department, and specify any exceptions;
(4) understands that the Commissioner will be relying on the accountant's report to monitor the financial position of the insurer;
(5) agrees to make available to the Commissioner for inspection or copying any and all work papers generated in the audit including, procedures followed, tests performed, information obtained, conclusions, planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of documents, schedules, or commentaries prepared or obtained by the independent certified public accountant in the course of examination; and
(6) agrees to retain the audit work papers until the Department has filed a report of examination on the period of the audit, but no longer than seven years from the date of the audit report.
(c) An insurer shall notify the Commissioner in writing within five business days of the dismissal or resignation of the accountant who prepared the insurer's immediately preceding filed audited financial report. The insurer shall notify the Commissioner in writing, within 10 business days of the notice of dismissal or resignation, whether in the 24 months preceding such dismissal or resignation there were any substantial, material disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, including disagreements resolved to the former accountant's satisfaction and disagreements not resolved to the former accountant's satisfaction. Substantial disagreements include those that occur between the former accountant and personnel of the insurer responsible for the insurer's audited financial report. Material disagreements include those which, if not resolved to the satisfaction of the former accountant, would have caused him or her to make reference to the subject matter of the disagreement in connection with his or her opinion.
(d)(1) The Commissioner shall disqualify any certified public accountant who:
(A) has engaged in unprofessional conduct as defined by 26 V.S.A. § 76;
(B) has been found to have violated the insurance laws of any state with respect to prior audit reports; or
(C) has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under this section.
(2) After notice and hearing, the Commissioner may find that a certified public accountant is not qualified to express his or her opinion in the report required by this section and may require the insurer to replace the accountant with an accountant qualified under this section. Any hearing held under this subsection shall be governed by 3 V.S.A. chapter 25.
(e) No partner or other person rendering the report required by the annual financial reporting rule adopted by the Commissioner under section 3578a of this title may act in that capacity for more than five consecutive years. Upon application by the insurer, the Commissioner may find that the rotation requirement of this subsection would pose an unreasonable hardship on the insurer and may extend the accountant's period of qualification for an additional term. In making such determinations, the Commissioner may consider the experience of the retained accountant and the size of his or her business, the premium volume of the insurer, and the number of jurisdictions in which the insurer transacts business, as provided by the annual financial reporting rule adopted by the Commissioner under section 3578 of this title.
(f) 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 domiciliary supervision authority duly audited by an independent chartered accountant. (Added 1991, No. 249 (Adj. Sess.), § 11; amended 1993, No. 12, § 5, eff. April 26, 1993; 2007, No. 49, § 4; 2013, No. 29, § 26.)