NAIC Annual Financial Reporting Model Regulation (Model Audit Rule, MDL-205) mdl205-s10-adverse-condition: Have the accountant report a material misstatement or capital shortfall to the board within five business days, and forward it to the commissioner within five more

The insurer must bind its accountant to tell the board or the audit committee in writing, inside five business days, if the accountant concludes that the financial condition the insurer reported to the commissioner at the balance sheet date is materially misstated, or that it does not meet the State's minimum capital and surplus requirement at that date. The insurer then has five business days from receipt to send the report on to the commissioner and give the accountant evidence of having done so; failing that evidence, the accountant sends the report to the commissioner directly within the next five business days. An accountant acting in good faith under this section is not liable for the statement, and the accountant's duty to act on facts learned after the report date follows the AICPA standards on subsequent discovery.