Independent external audits of GAAP financial statements are an inescapable reality for finance professionals. External audits are required by statute for public companies and are also becoming the norm among private companies experiencing growing demands for transparency from regulators, investors, and other stakeholders.
Since the National Association of Insurance Commissioners (NAIC) made revisions to the Financial Reporting Model Regulation (Model Audit Rule) in June 2006, the insurance industry’s attention to the risks associated with financial reporting has been on the rise. Structured similarly to Section 404 of the SarbanesâOxley Act, the Model Audit rule places a significant burden on Câlevel executives to ensure their oversight in the internal controls for financial reporting (ICFR) process. Executives within these insurance organizations, both public and private, will be required to evaluate their internal controls in preparation for the first reports due in 2010 for the 2009 reporting period.