CIA.CSOP

Question 1

Briefly describe when an actuarial approximation is ‘appropriate’

Answer 1

An approximation is appropriate if it does any of these without affecting the result:
- reduces cost
- reduces time
- improves control

Approximation should strike a balance between benefit and effort

Question 2

Identify 4 examples of quality assurance PROCESSES

Answer 2

• Check calculations
• Validate models
• Redo the work
• Peer review

Question 3

Identify 3 CONSIDERATIONS in determining what quality assurance processes to perform

Answer 3

• Purpose
• Complexity
• Significance of work
• Vulnerability to error
• Expectations of user
• Legislative requirements (for peer review)

Question 4

Identify 3 items an actuary should consider before using another person’s work

Answer 4

1. Qualifications of the other person
   (ACAS or FCAS is good)
2. Regular communication & info-sharing with the other person
3. Awareness by the other person of how the work is being used

Question 5

Identify the purpose of CIA/CICA Joint Policy Statement (3)

Answer 5

JPS discusses:
- Reliance of auditor & actuary on each other’s work
- Interaction between auditor & actuary
- Disclosure of responsibilities of auditor & actuary

Question 6

Define ‘enquiring professional’

Answer 6

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

Question 7

Define ‘responding professional’

Answer 7

A professional whose work is being used by another enquiring professional

Question 8

Identify actuary’s responsibility under JPS regarding financial statements

Answer 8

Actuary IS responsible for reliability and sufficiency of data

Question 9

Identify auditor’s responsibility under JPS regarding financial statements

Answer 9

Auditor IS responsible for integrity of financial statements (financial position, operations, cash flows)

Question 10

Identify 3 communication requirements for enquiring professional with responding professional

Answer 10

1. Notify responder that work is being used
2. Notify responder regarding needs
   (materiality, subsequent events, timing)
3. Request confirmation of responder’s appointment, professional standing, observance to standards

Question 11

Identify 3 communication requirements for responding professional with enquiring professional

Answer 11

1. Confirm that work will be done
2. Confirm appointment, professional standing, observance of standards
3. Notify of any issues in meeting enquiring professional’s needs

Question 12

Identify 3 considerations in estimating claims & premium liabilities

Answer 12

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