Privately held and mutual insurance companies should not consider themselves off the hook when it comes to Sarbanes-Oxley compliance. Even though the law, which passed in 2002, applies only to publicly held companies, the National Association of Insurance Commissioners (NAIC), the Kansas City, Mo.-based organization that oversees state insurance regulation, is working on adding SOX-like provisions to its model audit rule.At press time, a working group composed of members of the NAIC and the American Institute of Certified Public Accountants (AICPA), New York, was considering specific alterations to the NAIC's "Model Regulation Requiring Audited Annual Financial Reports." Those alterations are based on Titles II, III, and IV of Sarbanes-Oxley, according to Doug Stolte, chairman of the NAIC/AICPA working group and deputy commissioner over the financial regulation division of Virginia's Department of Insurance.
"In 2003, we began analyzing certain sections of SOX and compared it to our model audit rule," Stolte says. Then, last April, the NAIC developed a draft of its audit rule with proposed SOX-like changes. In March, Stolte expected two subgroups-the ones working on Titles II and III-to complete their work by June. Another subgroup, addressing the more controversial changes based on Section 404 internal controls-was aiming to finish its work by the end of this year.
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