CIA.Subseq

Question 1

Define the term subsequent event.

Answer 1

Event of which an actuary first becomes aware after the Calculation Date but before the Report Dt.

Question 2

What is the difference between an Adjusting Event and a Non-Adjusting Event? Define the term adjusting event.

subsequent event

Answer 2

Adjusting Event:
1. Event (after calculation date) that provides evidence of condition existing at calculation date.
2. Note: adjustments in calculations/reporting are required.

Non-adjusting event:
1. Event (after calculation date) that indicative of conditions arising after the CalcDt
2. Note: adjustments in calculations/reporting are not required, only disclosure.

Question 3

Briefly explain the prime consideration when applying the subsequent event decision tree.

Answer 3

PRIME CONSIDERATION: is the event material?
- if not material then usually no action is required
- but sometimes it’s still beneficial to disclose the event

Question 4

Identify the 4 questions to ask in the middle branch of the decision tree.

Event decision tree : when Actuary first become aware of the event Between calculation date and report date ( subsequent Event)

Answer 4

1. Was the event due to an error or omission?
2. When did event occur on or before calc date?
3. Does event make entity different on or before calc date?
4. Is the purpose to report on that event?

If answer is yes to one of those questions then reflect in calculation. Otherwise, disclose it but not need to reflect in calculation.

Question 5

Identify the 2 questions to ask in the right branch of the decision tree.

Event decision tree : when Actuary first become aware of the event after report dt

Answer 5

1. Would event has been reflected if it was a subsequent event?
2. Does the event invalidate the report?

If answer is yes, then withdraw report and amend. Otherwise, no actions needed.