North Dakota Administrative Code › Title 45 - Insurance, Commissioner of › Article 45-03 - Regulation of Insurance Companies › Chapter 45-03-20 - Annual Financial Reporting Model Regulation › Section 45-03-20-02 - Definitions

Current through Supplement No. 393, July, 2024
The terms and definitions in this section are intended to
				  provide definitional guidance as the terms are used within this chapter.
1. "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 and in all states in which they are licensed to practice.
				For Canadian and British companies, it means a Canadian-chartered or
				British-chartered accountant.
2. 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.
3. "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, 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 this chapter at the election of the controlling person. Refer to subsection
				6 of section
				45-03-20-12.1 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.
4. "Audited financial report" means and
				includes those items specified in section
				45-03-20-04.
5. "Group of insurers" means those licensed
				insurers included in the reporting requirements of North Dakota Century Code
				chapter 26.1-10, or a set of insurers as identified by management, for the
				purpose of assessing the effectiveness of internal control over financing
				reporting.
6. "Indemnification"
				means an agreement of indemnity or a release from liability if the intent or
				effect is to shift or limit in any manner the potential liability of a 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.
7. "Independent board member" has the same
				meaning as described in subsection 4 of section
				45-03-20-12.1.
8. "Insurer" means a licensed insurer as
				defined in North Dakota Century Code chapter 26.1-02.
9. "Internal audit function" means a person
				that provides 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.
10. "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, that is those items
				specified in subsections 2 through 7 of section
				45-03-20-04 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 subsections 2 through 7 of section
				45-03-20-04 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 financial statements, i.e., those items specified in
				subsections 2 through 7 of section
				45-03-20-04.