Regulators and insurers continued their tug of war over inclusion of provisions of the Sarbanes-Oxley Act of 2002 in a model law under consideration by state insurance regulators.
At an interim meeting in Atlanta last week, trade groups including the American Council of Life Insurers and National Association of Mutual Insurance Companies weighed in on the potential cost and redundancy of inclusion of any SOX provisions in the draft of the Model Regulation Requiring Annual Audited Financial Reports.
But speaking for regulators at the National Association of Insurance Commissioners, Kansas City, Mo., Doug Stolte, chair of the NAIC/AICPA working group and Virginia deputy commissioner-financial regulation, said that currently, if a company has a significant deficiency in its financial statements, its auditors are supposed to send a letter to regulators stating that fact. In 12 years, he said, he has only received one such letter.
Responding to an argument from insurers that there are already regulatory tools such as risk-based capital requirements, Stolte said all such tools depend on accurate financial reporting and implementing provisions similar to Sarbanes-Oxley are needed.