N.Y. Comp. Codes R. & Regs. tit. 11 § 89.1

Current through Register Vol. 46, No. 36, September 4, 2024

Section 89.1 - Definitions

For the purposes of this Part, the following definitions shall apply:

(a)AICPA means the American Institute of Certified Public Accountants.

(b)Affiliate of, or person affiliated with another person means a person that directly, or indirectly, controls, or is controlled by, or is under common control with, the other person specified.

(c)Audit committee means a committee (or equivalent body) established by the board of directors of a company for the purpose of overseeing the accounting and financial reporting processes of a company or group of companies, the internal audit function of a company or group of companies, if applicable, and external audits of financial statements of the company or group of affected companies, provided that:

(1) for a holding company that controls a group of companies, the audit committee of the holding company may be deemed to be the audit committee for one or more of those controlled companies solely for the purposes of this Part, even if all members of the holding company audit committee are not residents of this State;

(2) for a United States branch of an alien company, the audit committee may be comprised of the audit committee of the person that controls the United States branch; and

(3) for a company that does not otherwise designate an audit committee, the company's entire board of directors shall constitute the audit committee.

(d)Audited financial report means and includes those items specified in section 89.3 of this Part.

(e)Company means an authorized insurer as defined in Insurance Law section 107(a)(10), a fraternal benefit society as defined in Insurance Law section 4501(a), or a managed care organization (MCO) as defined in subdivision (n) of this section. Company does not include alien accredited reinsurers.

(f)Control has the meaning:

(1) ascribed by Insurance Law, section 1501(a)(2) for a company that is part of a holding company system that is subject to article 15 of the Insurance Law;

(2) ascribed by Insurance Law, section 107(a)(16) for an authorized insurer or fraternal benefit society and its subsidiaries that are not part of a holding company system; or

(3) set forth in 10 NYCRR section 98-1.2(j) for a MCO.

(g)CPA means:

(1) an independent certified public accountant or accounting firm who or that meets requirements established by the PCAOB and is also a registrant in good standing with the AICPA and every state in which the accountant or the firm is licensed to practice; or

(2) for a United States branch of a Canadian or British insurer, "CPA" also includes a Canadian-chartered or British-chartered accountant.

(h)Group of companies means those companies that are:

(1) part of a holding company system;

(2) a company and its subsidiaries that are not part of a holding company system; or

(3) a subset of a group of companies described in either paragraph (1) or (2) of this subdivision, which the company identifies for aggregation to implement and assess internal control over financial reporting.

(i)Holding company has the meaning ascribed by:

(1) Insurance Law, section 1501(a)(3) for an authorized insurer subject to article 15 of the Insurance Law; and

(2) 10 NYCRR section 98-1.2(u) for a MCO.

(j)Holding company system has the meaning ascribed by:

(1) Insurance Law, section 1501(a)(6) for an authorized insurer subject to article 15 of the Insurance Law; and

(2) 10 NYCRR section 98-1.2(v) for a MCO.

(k)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 CPA for failure to adhere to applicable auditing or professional standards, whether or not resulting in part from knowing of other misrepresentations made by the company or its representatives.

(l)Independent audit committee member has the meaning described in section 89.12(b) and (c) of this Part.

(m)Internal control over financial reporting means a process effected by a company's board of directors, management and other personnel designed to provide reasonable assurance regarding the reliability of those items specified in section 89.3 of this Part 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, 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.

(n)MCO or managed care organization means a managed care organization, as such term is defined in 10 NYCRR section 98-1.2(x), except for:

(1) a prepaid health services plan, as defined in 10 NYCRR section 98-1.2(ff);

(2) a primary care partial capitation provider, as defined in 10 NYCRR section 98-1.2(gg); and

(3) a comprehensive HIV special needs plan, as defined in 10 NYCRR section 98-1.2(i).

(o)NAIC means the National Association of Insurance Commissioners.

(p)PCAOB means the public company accounting oversight board, which was established by the Sarbanes-Oxley Act of 2002.

(q)Prior calendar year direct written and assumed premiums means the company's combined total of direct premiums and assumed premiums from non-affiliates.

(r)SEC means the United States Securities and Exchange Commission.

(s)SOX means the Sarbanes-Oxley Act of 2002, 15 U.S.C. section 7201et seq.

(t)SOX compliant company means 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:

(1) the pre-approval requirements of section 201 of SOX (section 10A(i) of the Securities Exchange Act of 1934, 15 U.S.C. section 78j-1(i));

(2) the audit committee independence requirements of section 301 of SOX (section 10A(m)(3) of the Securities Exchange Act of 1934, 15 U.S.C. section 78j-1(m)(3)); and

(3) the internal control over financial reporting requirements of section 404 (item 308 of SEC Regulation S-K).

(u)SOX section 404 means section 404 of the Sarbanes-Oxley Act of 2002 titled "management assessment of internal controls" and any rules and regulations promulgated thereunder.

(v)SOX section 404 report means "management's report on internal control over financial reporting" as defined by SOX section 404 and any rules or regulations promulgated thereunder.

(w)Work papers mean the records kept by a CPA of the procedures followed, the tests performed, the information obtained, the conclusions reached pertinent to the CPA's audit of the financial statements of a company, and any communication between the CPA and the company relating to the CPA's audit of the company. Work papers include audit planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the CPA in the course of the CPA's audit of the financial statements of a company and that support the CPA's opinion.

(x) Internal audit function means the role of applying a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes so as to add value, improve a company's operations, and accomplish its objectives.

N.Y. Comp. Codes R. & Regs. Tit. 11 § 89.1

Amended New York State Register May 13, 2020/Volume XLII, Issue 19, eff. 11/9/2020