Connecticut Administrative Code
Title 38a - Insurance Department
54 - Annual Audited Financial Reports
Section 38a-54-2 - Definitions

(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 he or she 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 who 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, 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 Sections 38a-54-1 to 38a-54-14, inclusive, of the Regulations of the Connecticut State Agencies at the election of the controlling person in accordance with the provisions of Section 38a-54-11 a(g) of the Regulations of Connecticut State Agencies. 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" or "statutory financial statement" or "audited statutory financial statement" mean and include those items specified in Section 38a-54-4 of the Regulations of Connecticut State Agencies.

(e) "Business combination" means the consolidation, for accounting purposes, of a corporation and one or more incorporated or unincorporated businesses. In a business combination, the multiple entities are considered as one entity for accounting purposes.

(f) "Commissioner" means the Insurance Commissioner of the State of Connecticut.

(g) "Department" or "Insurance Department" means the Insurance Department of the State of Connecticut.

(h) "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 other misrepresentations made knowingly or otherwise by the insurer or its representatives.

(i) "Independent board member" has the same meaning as described in Section 38a-54-11 a of the Regulations of Connecticut State Agencies.

(j) "Insurer" or "Insurance Company" means an insurance company, health care center or fraternal benefit society licensed by the Commissioner to do business in this State.

(k) "Group of insurers" means those licensed insurers included in the reporting requirements of Sections 38a-129 to 38a-142, inclusive, of the Connecticut General Statutes, or a set of such insurers as identified by management, for the purpose of assessing the effectiveness of internal controls over financial reporting.

(l) "Internal audit function" means a person or persons who 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.

(m) "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 financial statements such as those items specified in Section 38a-54-4 of the Regulations of Connecticut State Agencies and including those policies and procedures that:

(n) "NAIC" means the National Association of Insurance Commissioners.

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

(p) "Section 404" means Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's rules and regulations promulgated thereunder.

(q) "Section 404 Report" means a management's report on "internal control over financial reporting" as defined by the SEC and the Communication of Internal Control Related Matters Noted in an Audit.

(r) "SOX compliant entity" means an entity that either is required to be compliant with, or voluntarily is compliant with, the following provisions of the Sarbanes-Oxley Act of 2002: (1) the preapproval requirements of Section 201 (Section 10A(i) of the Securities Exchange Act of 1934); (2) the audit committee independence requirements of Section 301 (Section 10A(m)(3) of the Securities Exchange Act of 1934); and (3) the internal control over financial reporting requirements of Section 404 (Item 308 of SEC Regulation S-K).

(s) "Statutory audit" means the inspection of the accounting records and procedures of a business, government unit, or other reporting entity by an accountant for the purpose of verifying the accuracy and completeness of the records.

(t) "Statutory audit opinion" means the written conclusion based upon the statutory audit which indicates whether in the opinion of the accountant, the admitted assets, liabilities and surplus are represented fairly in all material respects.

(u) "Workpapers" means 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 examination of the financial statements of an insurer. Workpapers, accordingly, may include audit planning documentation, summary of unadjusted differences, audit completion memorandum, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents and schedules or commentaries prepared or obtained by the independent certified public accountant in the course of his or her examination of the financial statements of an insurer and which support his or her opinion thereof.