CIA CSOP Flashcards

1
Q

What is the purpose of CIA/CICA Joint Policy Statement? (3)

A

RELIANCE: of the auditor & actuary on each other’s work
INTERACTION: between auditor & actuary
DISCLOSURE of responsibilities of auditor & actuary

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2
Q

Define enquiring professional.

A

A professional who relies on the work of another (the responding professional) in the course of their own work.

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3
Q

Define responding professional.

A

A professional whose work is being used by another (the enquiring professional).

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4
Q

Responsibility of the management regarding the Financial Statement (F/S) according to JPS.

A

Management has overall responsibility for the F/S (this may include amounts determined by the actuary).

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5
Q

Responsibility of the actuary regarding the Financial Statement (F/S) according the JPS.

A
  • the actuary IS responsible for reliable and sufficient data
  • the actuary IS NOT responsible for data integrity or controls (may enquire of auditor regarding these items)
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6
Q

Responsibility of auditor regarding the Financial Statement (F/S) according to JPS.

A
  • auditor IS responsible for the fairness with which the B/S represents the financial position, operations, cash flows, etc.
  • auditor IS NOT responsible for the actuarial valuation (may enquire of the actuary regarding valuation)
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7
Q

Required actions for enquiring professional when communicating with responding professional. (3)

A

NOTIFY RP that work is being used
NOTIFY RP regarding needs: materiality, subsequent events, timing
REQUEST CONFIRMATION of RP’s appointment, professional standing, observance of standards

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8
Q

Required actions for responding professional when communicating with enquiring professional. (3)

A

CONFIRM that work will be done
CONFIRM appointment, professional standing, observance of standards
NOTIFY EP of problems meeting EP’s needs

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9
Q

Define claims liability.

A

It is the PV of claims, their related expenses, and taxes @ B/S (balance sheet) date that were incurred before B/S date.

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10
Q

Considerations in estimating claims & premium liabilities. (5)

A
  • U/W practices
  • claims handling practices
  • reinsurance
  • data processing systems
  • accounting systems
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11
Q

Define premium liability.

A

It is the PV of claims, their related expenses, taxes, and premium development Minus DPAE (Deferred Policy Acquisition Expenses) @ B/S (balance sheet) date incurred AFTER B/S date on policies in-force ON/EARLIER than B/S date.

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12
Q

When may MfAD(claims) be above range? (3)

A
  • unusually high uncertainty
  • when PfAD is already very low because best estimate of claims liability is very low
  • when stochastic methods indicates variability not identified using deterministic methods
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13
Q

When may MfAD(claims) be below range? (3)

A
  • when LOB has been COMMUTED to reinsurer and is in runoff
  • for LOB with pre-set payments (eg: structured settlement)
  • insurer has stop-loss coverage reserved at stop-loss limit
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14
Q

When may MfAD(inv) be below rage?

A

When the best estimate of the discount rate (based on the insurer’s assets) is already below 25bps.

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15
Q

What is the scope of CSOP 2600 (Consolidated Standards of Practice on Ratemaking) regarding derivation & recommendation of rates?

A
  • derivation of rates: within scope

- recommendation of rates: not within scope

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