N.Y. Comp. Codes R. & Regs. tit. 10, § 98-3.13 – Requirements for audit committees.

(a) The audit committee shall be directly responsible for the appointment, compensation and oversight of the work of any CPA (including resolution of disagreements between management and the CPA regarding financial reporting) for the purpose of preparing or issuing the audited financial report or related work pursuant to this Subpart. Every CPA shall report directly to the audit committee.
(b) Every member of the audit committee shall be a member of the board of directors, a member of the board of directors of a member of the holding MCO system or, for a United States branch of an alien MCO, a member of the audit committee of the person that controls the branch.
(c) In order to be considered independent for purposes of this section, a member of the audit committee may not, other than in the member’s capacity as a member of the audit committee, the board of directors, or any other board committee, accept any consulting, advisory or other compensatory fee from the MCO or be an affiliated person of the MCO or any subsidiary thereof, except to the extent that any law may require board participation by otherwise non-independent members, and, in such case, the member may participate in the audit committee and be designated as independent for audit committee purposes, unless the member is an officer or employee of the MCO or one of its affiliates.
(d) If a member of the audit committee ceases to be independent for reasons outside the member’s reasonable control, that person may remain an audit committee member of the responsible MCO until the earlier of the next annual meeting of the responsible MCO or one year from the occurrence of the event that caused the member to be no longer independent, provided that the MCO promptly notifies the commissioner.
(e) The MCO shall give written notice to the commissioner of the selection of its audit committee within 30 days of the effective date of this Subpart and within 30 days of any change in membership of the audit committee. The notice shall include a description of the reason for the change.
1. (1) The audit committee shall require the CPA that performs any audit for a MCO that is required by this Subpart to timely report to the audit committee:
  1. (i) all significant accounting policies and material permitted practices;
  2. (ii) all material alternative treatments of financial information within statutory accounting principles that have been discussed with management officials of the MCO, ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the CPA; and
  3. (iii) other material written communications between the CPA and the management of the MCO, such as any management letter or schedule of unadjusted differences.
2. (2) If a MCO is a member of a group of MCOs, the reports required by paragraph (1) of this subdivision may be provided to the audit committee on an aggregate basis for the group, provided that any substantial differences among MCOs in the system are identified to the audit committee.
(f)
(g) The proportion of independent audit committee members for a MCO shall meet or exceed the following minimum criteria:
1. (1) if the MCO’s prior calendar year direct written and assumed premiums are equal to or less than $300,000,000, no members of the audit committee shall be required to be independent;
2. (2) if the MCO’s prior calendar year direct written and assumed premiums are greater than $300,000,000 but not more than $500,000,000, 50 percent or more of the members of the audit committee shall be independent, unless otherwise provided by law as for a MCO; or
3. (3) if the MCO’s prior calendar year direct written and assumed premiums are more than $500,000,000, 75 percent or more of the members of the audit committee shall be independent.
(h) This section shall not apply to:
1. (1) A MCO that is a SOX compliant MCO or a directly or indirectly wholly-owned subsidiary of a SOX compliant MCO.