North Carolina § 58-10-420 - Independent certified public accountants.

§ 58-10-420. Independent certified public accountants.

A captive insurance company, after becoming subject to this Part, shall within 60 days, if not already disclosed at the time of application, report to the Commissioner in writing, the name and address of the independent certified public accountant retained to conduct the annual audit set forth in G.S. 58-10-415. A captive insurance company shall require its independent certified public accountant to immediately notify in writing an officer and all members of the board of directors or other governing body of the captive insurance company of any determination by the independent certified public accountant that the captive insurance company has materially misstated its financial condition in its report to the Commissioner as required in G.S. 58-10-405. A captive insurance company receiving a notification pursuant to this subsection shall forward a copy of the notification to the Commissioner within five business days after receipt of the notification and shall provide the independent certified public accountant with proof that the notification was forwarded to the Commissioner. If the independent certified public accountant fails to receive the proof within the five-day period required by this subsection, the independent certified public accountant shall within the next five business days submit a copy of the notification to the Commissioner. A captive insurance company shall require its independent certified public accountant to make available for review by the Commissioner or his or her appointed agent the work papers prepared in the conduct of the audit of the captive insurance company. The captive insurance company shall require that the independent certified public accountant retain the audit work papers for a period of not less than five years after the period reported upon. The aforementioned review by the Commissioner shall be considered an audit, and all working papers obtained during the course of such audit shall be confidential. The captive insurance company shall require that the independent certified public accountant provide copies, in such form as the Commissioner deems appropriate, of any of the working papers which the Commissioner considers relevant. Such working papers may be retained by the Commissioner. "Work papers" as referred to in this section include, but are not necessarily limited to, schedules, analyses, reconciliations, abstracts, memoranda, narratives, flow charts, copies of captive insurance company records, or other documents prepared or obtained by the independent certified public accountant and the independent certified public accountant's employees in the conduct of their audit of the captive insurance company. The lead audit partner may not act in that capacity for more than five consecutive years. For purposes of this subsection, lead audit partner means the partner having primary responsibility for the audit. The person shall be disqualified from acting in that or similar capacity for the captive insurance company for a period of five consecutive years. A captive insurance company may make application to the Commissioner for relief from the above rotation requirement on the basis of unusual circumstances. This application should be made at least 30 days before the end of the fiscal year. The Commissioner may consider the following factors in determining if the relief should be granted: Number of partners, expertise of the partners, or the number of insurance clients in the firm; and Premium volume of the captive insurance company. Repealed by Session Laws 2016-78, s. 4.1(m), effective June 30, 2016. Risk retention groups shall comply with Part 7 of Article 10 of this Chapter instead of this section. History (2013-116, s. 1; 2014-65, s. 10; 2015-99, s. 1; 2016-78, s. 4.1(m).) Editor's Note. - Session Laws 2013-116, s. 1 enacted this section as G.S. 58-10-422. It has been renumbered as G.S. 58-10-420 at the direction of the Revisor of Statutes. Effect of Amendments. - Session Laws 2014-65, s. 10, effective July 1, 2014, in subsection (b), substituted the last two sentences for "The independent certified public accountant shall furnish such notification to the Commissioner within five working days of notifying the captive insurance company"; and added subsection (e). Session Laws 2015-99, s. 1, effective June 19, 2015, inserted ", if not already disclosed at the time of application," in subsection (a); inserted "or other governing body" in the first sentence of subsection (b); and substituted "the fiscal year" for "the calendar year" at the end of the fifth sentence in the introductory language of subsection (d). Session Laws 2016-78, s. 4.1(m), effective June 30, 2016, substituted "audit" for "examination" twice in the third sentence of subsection (c); added "and" at the end of subdivision (d)(1); deleted "or" at the end of subdivision (d)(2); and deleted subdivision (d)(3) , which read "Number of jurisdictions in which the insurer transacts business."