Date:September 2, 1998
To:All Wisconsin Domiciled Insurers
From:Randy Blumer, Commissioner of Insurance
Subject:CPA Audit Workpapers

Insurers are reminded that it is the responsibility of the insurer to require that its certified public accountant comply with s. Ins 50.15, Wis. Adm. Code, by making copies of its audit workpapers available to state insurance examiners upon request. Failure of a CPA firm to provide copies of requested workpapers may result in forfeitures to the insurer, and an order that the insurer replace the accounting firm. Pursuant to s. Ins 50.15 (2), Wis. Adm. Code, the commissioner may keep all workpapers obtained confidential under s. 601.465 Wis. Stat.

Workpapers are defined in ch. Ins 50, Wis. Adm. Code, as records kept by the certified public accountant of the procedures followed, the tests performed, the information obtained, and the conclusions reached pertinent to the certified public accountant's examination of the financial statements of an insurer. "Workpapers" include, but are not limited to, audit planning documentation, audit guides, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documentation and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of the examination of the financial statements of the insurer or which support the opinion of the independent certified public accountant regarding the financial statements.

Although historically this office has had excellent cooperation from certified public accountants, in some cases, we are finding that CPA firms are refusing to provide our examiners with copies of audit guides, commentary, specialist memoranda, draft recommendations on internal controls, or other items requested. This occurs either by not providing such copies upon request, or by deleting information from copies provided to examiners. As stated above, failure of a CPA firm to provide copies of requested workpapers may result in forfeitures to the insurer, and an administrative order that the insurer replace the accounting firm. Since it is the insurer's responsibility to ensure that its CPA complies with the workpaper requirement, every insurer should contact its CPA firm to verify that copies of any workpapers requested will be promptly provided to examiners without editing. Insurers should verify the requirements of ch. Ins 50, Wis. Adm. Code, with their CPA firms, in order to facilitate compliance with this chapter. This office takes very seriously the failure of an insurer's CPA firm to make its work papers available to our examiners.

Any questions regarding this bulletin may be directed to Bud Mandt (608) 266-0083, Director of the Bureau of Financial Analysis and Examinations of the office.

Note: The following address is a link to the administrative code in pdf format:
http://www.legis.state.wi.us/rsb/code/ins/

To link to chapters in the administrative code, add insxxx.pdf to the end of the address. xxx represents the chapter number in three digits (003 for chapter 3).