Examination Sound Practices
Sound Practices in various areas have been developed for Financial Examiners to utilize on their examinations and help facilitate the examination process.
Many of these practices originate from work performed directly by Examiners. Through the NAIC Peer Review process, examination files are submitted and are reviewed by the Examination team at the NAIC and Examiners from participating states. As part of this process, Sound Practices are often identified and shared to continue to enhance the quality and efficiency of examination work performed by states. Some of these practices may assist Examiners in applying guidance prescribed in the Financial Condition Examiners Handbook (Handbook).
Note that although these Sound Practices are intended to be consistent with Handbook guidance, none of the practices should be viewed as authoritative guidance. The Handbook should be consulted for further clarification as necessary.
Below are links to various documents and examples that Financial Examiners may find beneficial.
This page will be updated periodically as additional sound practices are identified. Please check back regularly for updates.
If you would like to recommend additional sound practices for consideration, please provide suggestions to Bailey Henning.
NOTE: The Financial Examination unit is in the process of updating the resources available on this page. See the 'last updated' dates associated with the Sound Practices below:
General Sound Practices
- Required Sections of Handbook Guidance (last updated 10/8/2019)
- This chart is a tool that may be used to assist examiners in identifying which elements within the Handbook are required to be completed as part of every examination.
- Sound Practices in Testing Overarching Prospective Risks (last updated April 2020)
- Exhibit V (last updated 2/26/2020) (Note: The Sound Practice is based on the old Exhibit V. A new version was adopted in 2019 and is first contained in the 2020 Handbook. NAIC staff will update this Sound Practice as time permits, but he overall messages in the document may still prove useful to staff)
- Sound Practices in Utilizing Exhibit DD - Critical Risk Categories (last updated 2/10/15)
Working with Third-Parties
- Sound Practices in Documenting Reliance on Audit Workpapers (last updated 2/10/15)
- Agenda for Pre-Exam Meeting with External Auditor (last updated 6/10/14)
- This template was provided by the North Carolina Department of Insurance as an example of possible questions to address when meeting with the external auditor during the planning phase of an examination. While Exhibit E provides a list of items to assess the overall reliance on both external and internal auditors, this template provides additional suggestions to use in conjunction with Exhibit E to facilitate the meeting with the external auditor.
Communications with Analysts, Department Personnel and Other States
- Sound Practices in Analyst/Examiner Communication (last updated 8/11/16)