KRS 342.823: Discounting not to be used in determining solvency -- Authority's reports -

- Annual statement of solvency -- Circumstances permitting contract audit

with certified public accountant -- Discretionary levy and enforcement of

assessments.

(1) In determin ing the solvency of the authority in regard to maintaining adequate

reserves, the commissioner of insurance, the independent accountant engaged for

the annual audit, and the board, in exercising its prudent stewardship, shall not

utilize the practice of "d iscounting" the funds to reduce future liabilities, except in

conformity with standards or rules promulgated by the National Association of

Insurance Commissioners.

(2) The authority shall file reports required by KRS 304.3-240.

(3) The authority shall fil e a report not later than March 31 of each year indicating the

business done by the authority during the previous year, including a balance sheet

showing assets and liabilities at the beginning and conclusion of that year. The

report shall be a public record and shall be delivered to the Governor, commissioner

of insurance, Auditor of Public Accounts, Attorney General, and the co-chairs of the

Legislative Research Commission. Additionally, a statement of solvency shall be

prepared which shall include, at a minimum:

(a) A summary of the prior quarterly reports required in KRS 342.821;

(b) A management projection of the future solvency status for the authority; and

(c) Any recommendations pertaining to the same.

(4) The authority shall not enter into any contr act with a certified public accountant for

an audit unless the Auditor of Public Accounts has declined in writing to perform

the audit or has failed to respond within thirty (30) days of receipt of a written

request for an audit. Any contract with a certif ied public accountant entered into as

a result of the Auditor of Public Accounts declining to perform the audit shall

specify the following:

(a) That the certified public accountant shall forward a copy of the audit report

and management letters to the Aud itor of Public Accounts, Attorney General,

and Legislative Research Commission; and

(b) That the Auditor of Public Accounts shall have the right to review the

certified public accountant's work papers.

(5) If at any time the assets of the authority are les s than its liabilities, the board may

levy an assessment on its policyholders in the manner provided in Subtitle 24 of

KRS Chapter 304.