§ 147.9a. Establishment and communication of internal control over financial reporting.
(a) An insurer or insurer group shall establish internal control over financial reporting policies and procedures designed to provide reasonable assurance that:
(1) The financial statements of the insurer or insurer group as required under § 147.4(b) and (c) (relating to contents of annual audited financial report) are reliable.
(2) Records are created and maintained to accurately and fairly reflect dispositions of assets and other transactions.
(3) Transactions are recorded as needed to prepare financial statements.
(4) Receipts and expenditures are made only as authorized by the management or board of directors of the insurer or insurer group.
(5) Unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements of the insurer or insurer group are prevented or detected in a timely manner.
(b) An insurer required under this chapter to file an annual audited financial report shall provide the Department with a written communication prepared by the independent certified public accountant describing internal control related matters identified in the audit. The written communication shall be filed with the Department within 60 days after the filing of the annual audited financial report.
(c) The communication must include a description of any unremediated material weakness in the insurer’s internal control over financial reporting as of the immediately preceding December 31 or a statement that no unremediated material weaknesses were identified in the audit. For purposes of this subsection, the term ‘‘material weakness’’ is as defined by AU Section 325 of the Professional Standards of the American Institute of Certified Public Accountants, (SAS 112) Communicating Internal Control Related Matters Identified in an Audit, or its replacement.
(d) If a communication of internal control related matters filed under subsection (b) includes a description of unremediated material weaknesses, either the independent certified public accountant or the insurer shall provide the Department, within 60 days after the filing of the annual audited financial report, a written description of actions taken or proposed to eliminate the unremediated material weaknesses.
Source The provisions of this § 147.9a adopted October 2, 2009, effective October 3, 2009, 39 Pa.B. 5730.
Cross References This section cited in 31 Pa. Code § 147.2 (relating to definitions); 31 Pa. Code § 147.3 (relating to filing and extensions for filing required reports and communications); and 31 Pa. Code § 147.9b (relating to management’s report of internal control over financial reporting).
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