Section 925.70  Qualifications of Accountant

a)         The Director shall not recognize any person or firm as a qualified accountant if the person or firm:

1)         Is not in good standing with the American Institute of Certified Public Accountants and in all states in which the accountant is licensed to practice or, for a Canadian or British company, that is not a chartered accountant;

2)         Has either directly or indirectly entered into an agreement of indemnity or release from liability (collectively referred to as indemnification) with respect to the audit of the insurer; or

3)         Has repeatedly failed to timely comply with the written requests of the Director's examiners for copies of the workpapers as required pursuant to Sections 925.115 and 925.120 of this Part.

b)         Except as otherwise provided in this Section, the Director shall recognize an accountant as qualified as long as the accountant conforms to the standards of the profession, as contained in the Code of Professional Ethics of the American Institute of Certified Public Accountants or similar code.

c)         A qualified accountant may enter into an agreement with an insurer to have disputes relating to an audit resolved by mediation or arbitration.  However, in the event of a delinquency proceeding commenced against the insurer under Article XIII½ of the Code [215 ILCS 5/Art. XIII½], the mediation or arbitration provisions shall operate at the option of the statutory successor.

d)         The requirements of this subsection (d) shall become effective for years beginning after December 31, 1994.  No partner or other person responsible for rendering a report may act in that capacity for more than 7 consecutive years.  Following any such period of service such person shall be disqualified from acting in that or a similar capacity for the same company or its insurance subsidiaries or affiliates for a period of 2 years.  An insurer may make application to the Director for relief from the above rotation requirement on the basis of unusual circumstances.  The Director may consider the following factors in determining if the relief should be granted:

1)         Number of partners, expertise of the partners or the number of insurance clients in the currently registered firm;

2)         Premium volume of the insurer; or

3)         Number of jurisdictions in which the insurer transacts business.

e)         The Director shall not recognize as a qualified accountant, nor accept any annual audited financial report prepared in whole or in part by any natural person who:

1)         Has been convicted of fraud, bribery, a violation of the Racketeer Influenced and Corrupt Organizations Act (18 USC Sections 1961-1968), or any dishonest conduct or practices under federal or state law;

2)         Has been found to have violated the insurance laws of this State with respect to any previous reports submitted under this Part; or

3)         Has demonstrated a pattern or practice of failing to detect or disclose material information in previous reports filed under the provisions of this Part.

f)          The Director, as provided in Section 401 of the Code [215 ILCS 5/401], may as provided in Administrative Hearing Procedures (50 Ill. Adm. Code 2402), hold a hearing to determine whether an accountant is qualified and, considering the evidence presented, may rule that the accountant is not qualified for purposes of expressing an opinion on the financial statements in the annual audited financial report made pursuant to this Part and require the insurer to replace the accountant with another whose relationship with the insurer is qualified within the meaning of this Part.

(Source:  Amended at 27 Ill. Reg. 16121, effective October 6, 2003)