CIA.Subseq

Question 1

Define: calculation date

Answer 1

Effective date of calculation (Ex: for financial statements, the calculation date would normally be the balance sheet date)

Question 2

Define: report date

Answer 2

Date on which the actuary completes the report on their work

Question 3

Define: report

Answer 3

Actuary’s oral or written communication to users about their work

Question 4

Define: subsequent event

Answer 4

An event of which an actuary first becomes aware after the calcuation date but before the corresponding report date

Question 5

Define: adjusting event + provide an example

Answer 5

• Event (after CalcDt) that provides evidence of conditions existing (at CalcDt): results in adjustment
• Example: reinsurer insolvency after CalcDt that was due to gradual deterioration occuring before CalcDt

Question 6

Define: non-adjusting event + provide an example

Answer 6

• Event (after CalcDt) indicative of conditions arising (after CalcDt): NO adjustments
• Example: reinsurer insolvency due to catastrophe

Question 7

Middle Branch (subsequent event) considerations
[EWDP]

Answer 7

Error?
Yes: reflect
No: next question

When?
On/before CalcDt: reflect
After CalcDt: next question

Make entity different?
No: stop
Yes (on or before CalcDt): reflect, if yes after CalcDt: next question

What is the purpose of the work?
If report on entity as it will be: reflect
if report on entity as it was: inform only

Question 8

What is the prime consideration when applying the subsequent event decision tree?

Answer 8

Is the event material?
- If not material then usually no action is required
- But sometimes it’s still beneficial to disclose the event

Question 9

(6.8 Change in Industry Benchmarks): Relevant Comments: provide any further relevant detail(s) related to the INDUSTRY BENCHMARKS example

Answer 9

This situation could arise for a new company without its own credible data (must rely on industry benchmarks)

Question 10

Identify circumstances under which a subsequent event must be accounted for (4)

Answer 10

• Event retroactively makes the entity different at calculation date
• Event provides information related to the entity as it was at calculation date
• Event happened before calculation date
• Event makes entity different after calculation date and purpose of work is to report entity as it was after event

Question 11

Describe the right branch decision tree (this is for events known after calculation & report date)

Answer 11

Reflected?
(would event be reflected if it were a subsequent event?)
No, do nothing
Yes, go to next question

Invalidates?
(does the event invalidate the report?)
No, consider informing users but don’t reflect event Yes, withdraw/amend report