California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 3.3 - Annual Financial Reporting › Section 2309.3 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The terms and definitions contained herein are intended to
					 provide definitional guidance as the terms are used within these
					 regulations.
(a) "Accountant" or
				  "independent certified public accountant" means an independent certified public
				  accountant or accounting firm in good standing with the American Institute of
				  Certified Public Accountants (AICPA) and in all states in which the independent
				  certified public accounting or accounting firm is licensed to practice; for
				  Canadian and British companies, it means a Canadian-chartered or
				  British-chartered accountant.
(b)
				  An "affiliate" of, or person "affiliated" with, a specific person, is a person
				  that directly, or indirectly through one or more intermediaries, controls, or
				  is controlled by, or is under common control with, the person
				  specified.
(c) "Audit Committee"
				  means a committee (or equivalent body) established by the board of directors of
				  an entity for the purpose of overseeing the accounting and financial reporting
				  processes of an insurer or group of insurers, and audits of financial
				  statements of the insurer or group of insurers. The Audit Committee of any
				  entity that controls a group of insurers may be deemed to be the Audit
				  Committee for one or more of these controlled insurers solely for the purposes
				  of these regulations at the election of the controlling person. Refer to
				  Section 2309.14(e) for
				  exercising this election. If an Audit Committee is not designated by the
				  insurer, the insurer's entire board of directors shall constitute the Audit
				  Committee.
(d) "Audited financial
				  report" means and includes those items specified in 2309.5 of these
				  regulations.
(e) "Indemnification"
				  means an agreement of indemnity or a release from liability where the intent or
				  effect is to shift or limit in any manner the potential liability of the person
				  or firm for failure to adhere to applicable auditing or professional standards,
				  whether or not resulting in part from knowing of other misrepresentations made
				  by the insurer or its representatives.
(f) "Independent board member" has the same
				  meaning as described in 2309.14(c).
(g) "Insurer" means an insurer admitted to
				  transact business in this state.
(h) "Group of insurers" means those licensed
				  insurers included in the reporting requirements of California Insurance Code
				  section
				  1215, et
				  seq., or a set of insurers as identified by management, for the purpose of
				  assessing the effectiveness of internal control over financial
				  reporting.
(i) "Internal control
				  over financial reporting" means a process effected by an entity's board of
				  directors, management and other personnel designed to provide reasonable
				  assurance regarding the reliability of the financial statements, i.e., those
				  items specified in 2309.5(b) through 2309.5(g) of these regulations and
				  includes those policies and procedures that:
(1) Pertain to the maintenance of records
				  that, in reasonable detail, accurately and fairly reflect the transactions and
				  dispositions of assets;
(2) Provide
				  reasonable assurance that transactions are recorded as necessary to permit
				  preparation of the financial statements, i.e., those items specified in
				  2309.5(b) through 2309.5(g) of these regulations and that receipts and
				  expenditures are being made only in accordance with authorizations of
				  management and directors; and
(3)
				  Provide reasonable assurance regarding prevention or timely detection of
				  unauthorized acquisition, use or disposition of assets that could have a
				  material effect on the financial statements, i.e., those items specified in
				  2309.5(b) through 2309.5(g) of these regulations.