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Changes to a Model Audit Rule model regulation that would incorporate elements of the Sarbanes Oxley Act of 2002 in the model continue to receive vigorous reaction as witnessed by comments made during the summer meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
The debate continues even as the Securities and Exchange Commission, Washington, announced approval of an auditing standard to help companies comply with Section 404 of SOX. The SEC announcement was made on June 18. Section 404 of SOX requires public companies to include in annual reports a management report on the companys internal control over financial reporting and an accompanying auditors report.
Provisions that are similar to Section 404 now in the Model Audit Rule draft would require nonpublic companies to adhere to the requirements that public companies now have. An exemption would be put in place for companies with less than $25 million in premium.
During a recent public hearing on the matter, regulators listened as insurers explained why it would impose a burden on them.
Regulators maintain that the changes are needed so that they can better regulate the solvency of companies but agreed to listen to concerns before they decide on changes.
Doug Stolte, a deputy commissioner with the Virginia insurance bureau, also noted that the requirements in SOX are becoming an international business standard and the insurance industry cannot afford to be the only industry that does not address it.
