How Will the Model Audit Rule Affect Your Company? The NAIC Annual Financial Reporting Model Regulation (MAR) is designed to improve corporate governance and the reliability of statutory reporting at insurance companies. The first required actions are scheduled to take place 12 months before a company’s first year-end under the new regulation (December 31, 2009, for December year-end insurers). However, not all sections of the MAR are expected to be applicable for most insurers. For the first time, private insurers will be required to undergo annual audits. Requirements specific to audit committee independence and composition and external auditor relationships are similar to SEC requirements. Section 16 of the MAR requires an annual assessment of internal controls over financial reporting (ICFR), similar to Section 404 of the Sarbanes-Oxley Act. Already SOX compliant? The MAR is specific to statutory reporting, not GAAP reporting. This may be an issue for audit committees who focus only on GAAP reporting. Additionally, documentation gaps must be addressed and more controls tested. There are also required communications and other less resource-intense requirements included in the regulation. Are you concerned about which sections of the regulation apply to your organization and how MAR compliance could affect your existing resources?
Contact the experts at Jefferson Wells. We’ve been there, done that – completing more than 3,000 governance and ICFR engagements for companies around the world.