By:  Carona                                                       S.B. No. 1591


A BILL TO BE ENTITLED

AN ACT

relating to accountant practice requirements for certain audits of 
insurer financial reports.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subsection (c), Section 12, Article 1.15A, 
Insurance Code, is amended to read as follows:
	(c)  The commissioner may not accept an audited financial 
report prepared in whole or in part by an individual or firm who the 
commissioner finds:
		(1)  has been convicted of fraud, bribery, a violation 
of the Racketeer Influenced and Corrupt Organizations Act (18 
U.S.C. Sections 1961 through 1968), or any state or federal 
criminal offense involving dishonest conduct;
		(2)  has violated the insurance laws of this state with 
respect to any report filed under this article; [or]
		(3)  has demonstrated a pattern or practice of failing 
to detect or disclose material information in reports filed under 
this article; or
		(4)  has directly or indirectly entered into an 
agreement of indemnity or release of liability regarding an audit 
of an insurer.
	SECTION 2.  Subsection (b), Section 14, Article 1.15A, 
Insurance Code, is amended to read as follows:
	(b)  The examination of an insurer's financial reports shall 
be conducted in accordance with generally accepted auditing 
standards or with standards adopted by the Public Company 
Accounting Oversight Board, as applicable.  The accountant 
conducting the audit shall consider:
		(1)  the standards specified [Consideration should 
also be given to such other procedures illustrated] in the 
Examiner's Handbook promulgated by the National Association of 
Insurance Commissioners; or
		(2)  other analogous nationally recognized standards 
adopted by commissioner rule.
	SECTION 3.  The changes in law made by this Act apply only to 
an audit begun under Article 1.15A, Insurance Code, as amended by 
this Act, on or after the effective date of this Act.  An audit begun 
or pending before that date is governed by the law in effect on the 
date the audit is begun, and the former law is continued in effect 
for that purpose.
	SECTION 4.  This Act takes effect September 1, 2005.