New Mexico Administrative Code › Title 13 - INSURANCE › Chapter 2 - INSURANCE COMPANY LICENSING AND OPERATION › Part 5 - ANNUAL AUDITED FINANCIAL REPORTS › Section 13.2.5.7 - DEFINITIONS

Current through Register Vol. 35, No. 13, July 16, 2024
A. 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.
B.
"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 insurer's, and audits of financial statements of the insurer or group
				of insurer's. The audit committee of any entity that controls a group of
				insurer's may be deemed to be the audit committee for one or more of these
				controlled insurer's solely for the purposes of this rule at the election of
				the controlling person. If an audit committee in not designated by an insurer,
				the insurer's entire board of directors shall constitute the audit
				committee.
C.
"Audited
				financial report"
means and includes all items specified in
				13.2.5.10,
				13.2.5.11
				and
				13.2.5.12
				NMAC.
D.
"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.
E.
"Independent audit committee member"
has the same meaning as
				described in Subsection D of
				13.2.5.16
				NMAC.
F.
"Independent
				certified public accountant"
("ICPA") means a 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 ICPA is
				licensed to practice, who maintains compliance with the AICPA Independence Rule
				and its interpretations, including the Conceptual Framwork for Independence.
				For Canadian and British companies, it means a Canadian-charted or
				British-charted accountant.
G.
"Insurer"
means an authorized insurer, an eligible surplus lines
				insurer, and a registered risk retention group, unless the context clearly
				indicates otherwise.
H.
"Group of insurer's"
means those licensed insurer's included in
				the reporting requirements of the Insurance Holding Company Law or a set of
				insurer's as identified by management, for the purpose of assessing the
				effectiveness of internal control over financial reporting.
I.
"Internal audit function"
means a person or person's who provide independent, objective and reasonable
				assurance designed to add value and improve an organization's operations and
				accomplish its objectives through a systemic, disciplined approach to evaluate
				and improve the effectiveness of risk management, control and governance
				processes.
J.
"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
				13.2.5.23
				NMAC 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
				Subsections A and B of
				13.2.5.22
				NMAC 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 authorized acquisition, use or disposition of
				assets that could have a material effect on the financial statements, i.e.,
				those items specified in
				13.2.5.23
				NMAC.