CIA.AA-IFRS17 Flashcards
Briefly describe the responsibilities of the AA that have not changed under IFRS 17. (4/6)
Policy Liabilities: The definition and coverage of “policy liabilities” are unchanged
Opinion: The AA continues to provide opinions on policy liabilities.
Others: The AA both relies on and provides work for others, including external auditors.
Reporting: The AA still creates formal reports for regulators following appropriate guidelines.
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Appointment: The AA’s role remains reserved and requires a formal appointment
AAP: The AA ensures that calculation of policy liabilities follows accepted actuarial practices (AAP) in Canada.
What sort of report would the AA issue if they used but did not take responsibility for the work of others?
The AA would issue a report with reservations
What sort of report would the AA issue if they used and took responsibility for the work of others?
The AA would issue a report without reservations
(assuming everything else regarding the policy liabilities was in order.)
Describe situations where the AA would use but not take responsibility for the work of others. (2)
- if the work conflicts with what would be appropriate for the purpose of the actuarial services
- if the actuary is unable to judge the appropriateness of the work including assumptions & methodology
(without lots of extra work beyond the scope of the assignment)
Describe when the AA would use and take responsibility for the work of others. (3)
when such actions are justified based on considerations such as:
* communication with the other person that is early and periodic
* confidence in the other person?s qualifications & competence
* awareness by the other person of how the actuary intends to use the other persons work
Identify 3 items (accounting policies, methods, or assumptions) that may be set by someone other than the AA.
- method to determine discount rates
- eligibility for PAA
- RA for non-financial risk
List questions the AA might ask to determine whether to take responsibility for the work of others. (5)
- is the work consistent with a reasonable interpretation of the IFRS 17 standard?
- is the work consistent with accepted actuarial practice in Canada?
- has the AA confirmed the other person’s qualifications and awareness of how the work is being used
- is the work similar to what the AA would have done?
- Is the AA able to judge the appropriateness of the work
(without substantial additional work beyond the scope of the assignment)
Identify examples of situations where it may be appropriate to report with reservation. (5)
(CLINT)
Change in assumption or methodology affecting disclosure items:
* where an item valued by the actuary is materially affected by a change in assumption or methodology that is not disclosed in the financial statements.
Liabilities different than those calculated by the actuary:
* where the financial statements of an insurer report policy liabilities that are materially different from those calculated and reported to the regulator by the AA.
Impracticality of restatement:
* where restating the preceding year valuation to be consistent with the current year valuation would be appropriate but not practical.
New appointment:
* where the newly appointed AA uses but is unable to take responsibility for a predecessor AA?s work.
Takeover of insurer with insufficient records:
* where the AA is unable to judge the appropriateness of a predecessor AA?s work.
What is the standard wording for the AA’s opinion according to IFRS 17.
To the policyholders [and shareholders] of [the ABC Insurance Company]:
* I have valued the policy liabilities of [the Company] for its [consolidated] financial statements prepared..
..in accordance with International Financial Reporting Standards for the year ended [31 December xxxx].
* In my opinion, the amount of policy liabilities is appropriate for this purpose.
* The valuation conforms to accepted actuarial practice in Canada and the [consolidated] financial statements fairly present the results of the valuation.
Describe 3 differences in the wording of the AA’s opinion under IFRS 17 versus the old standard, IFRS 4
IFRS Compliance:
* The revised opinion stresses that the policy liabilities valuation complies with relevant IFRS standards
* includes IFRS 17 (insurance contracts), IFRS 9 (investment contracts), and IFRS 15 (service contracts).
Appropriate for Financial Statements:
* The AA no longer opines that liabilities make “appropriate provision for all policy obligations.”
* Instead, the AA now asserts the amount of policy liabilities is appropriate for inclusion in the financial statements.
Broader Scope:
* The scope of “fairly present” in the AA’s opinion is broader under IFRS 17.
* This reflects more extensive presentation and disclosure requirements
including details on insurance contract liabilities and more line items derived from the AA?s valuation.