Code of Massachusetts Regulations › 211 CMR - DIVISION OF INSURANCE › Title 211 CMR 26.00 - Annual Financial Reporting For Years Ending 2010 And After › Section 26.04 - Definitions

Current through Register 1525, July 5, 2024
The terms and definitions in 211 CMR 26.04 are intended to
				provide definitional guidance as the terms are used in
				211 CMR 26.00.
Accountant and Independent Certified Public
				Accountant
. An independent certified public accountant or
				accounting firm licensed to practice in the Commonwealth of Massachusetts or in
				any state with similar licensing requirements and a member in good standing of
				the American Institute of Certified Public Accountants (AICPA) and in all
				states in which he or she is licensed to practice; for Canadian and British
				companies, it means a Canadian-chartered or British-chartered
				accountant.
Affiliate of, or Person Affiliated with, a Specific
				Person
. 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.
Audit Committee
. 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, the Internal audit function of an insurer or
				Group of insurers (if applicable), and external 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
				211 CMR 26.00 at the election
				of the controlling person. Refer to
				211 CMR 26.16(5)
				 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.
Audited Financial Report
. Those items
				specified in
				211 CMR
				26.06.
Commissioner
. The Commissioner of
				Insurance or his or her designee.
Division
. The Division of Insurance of
				the Commonwealth of Massachusetts.
Group of Insurers
. Those licensed
				insurers included in the reporting requirements of M.G.L. c. 175, §§
				206 through 206D, and
				211 CMR 7.00:
Massachusetts Insurance Holding Company System,
or a set of
				insurers as identified by management, for the purpose of assessing the
				effectiveness of Internal controls over financial reporting.
Indemnification
. 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.
Independent Board Member
. This term
				has the same meaning as described in
				211 CMR
				26.16(3).
Insurer
. Any insurance company doing
				business in the Commonwealth of Massachusetts under M.G.L. c. 175 including,
				but not limited to, all life, accident and health, property and liability,
				title, "b" reinsurers and surplus line companies regulated by the Division of
				Insurance of the Commonwealth of Massachusetts. Insurer also shall include
				reciprocal insurance exchanges as defined in M.G.L. c. 175, § 94A, and
				health maintenance organizations ("HMO") doing business in
				Massachusetts.
Internal Audit Function
. A person or
				persons that provide independent, objective and reasonable assurance designed
				to add value and improve an organization's operations and accomplish its
				objectives by bringing a systematic, disciplined approach to evaluate and
				improve the effectiveness of risk management, control and governance
				processes.
Internal Control over Financial
				Reporting
: 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
				211 CMR
				26.06(2) through (7), and
				includes those policies and procedures that:
(a) Pertain to the maintenance of records that, in reasonable
				detail, accurately and fairly reflect the transactions and dispositions of
				assets;
(b) Provide reasonable assurance that transactions are recorded
				as necessary to permit preparation of the financial statements,
i.e.,
those items specified in
				211 CMR
				26.06(2) through (7), and
				that receipts and expenditures are being made only in accordance with
				authorizations of management and directors; and
(c) Provide reasonable assurance regarding prevention or timely
				detection of unauthorized acquisition, use or disposition of assets that could
				have a material effect on the audited financial statements,
i.e.,
those items specified in
				211 CMR
				26.06(2) through (7).
NAIC.
The National Association of
				Insurance Commissioners.
SEC
. The United States Securities and
				Exchange Commission.
Section 404.
Sarbanes-Oxley Act of
				2002 § 404 and the SEC's rules and regulations promulgated
				thereunder.
Section 404 Report.
Management's
				report on "internal control over financial reporting" as defined by the SEC and
				the related attestation report of the independent certified public accountant
				as described in the definition of
Accountant
and
Independent Certified Public Accountant
.
SOX.
The Sarbanes-Oxley Act of
				2002.
SOX Compliant Entity
. An entity that
				either is required to be compliant with, or voluntarily is compliant with, all
				of the following provisions of the Sarbanes-Oxley Act of 2002:
(a) the preapproval requirements of § 201 (§ 10A(i)
				of the Securities Exchange Act of 1934);
(b) the Audit committee independence requirements of §301
				(§ 10A(m)(3) of the Securities Exchange Act of 1934); and
(c) the Internal control over financial reporting requirements
				of § 404 (Item 308 of SEC Regulation S-K).
Workpapers
. The records kept by the
				independent certified public accountant of the procedures followed, the tests
				performed, the information obtained, and the conclusions reached pertinent to
				his or her audit of the financial statements of an insurer. Workpapers may
				include, but are not limited to, audit planning documentation, work programs,
				analyses, memoranda, letters of confirmation and representation,
				reconciliations, flow charts, abstracts of company documents and schedules or
				commentaries, copies of company records or other documents prepared or obtained
				by the independent certified public accountant in the course of his or her
				audit of the financial statements of an insurer and which support the
				accountant's opinion.