ICA.Ch47

Question 1

Identify 3 duties of the audit committee

Answer 1

1. review annual statement before Board of Director approval
2. review such company returns as superintendent may specify
3. review investments & transactions with material adverse events brought to audit committee
4. require management to implement & maintain internal controls
5. meet with auditor: discuss Annual Report
6. meet with actuary: discuss parts of Annual Report prepared by actuary
7. meet with chief internal auditor: discuss effectiveness of internal controls

3 Reviews - 1 require - 3 Meetings

Question 2

What are the requirements for a CFO to be AA

Answer 2

• audit committee writes to OSFI that duties of CFO & AA can be adequately & independently performed
• OSFI authorizes appointment
• must also list the legal requirements to be an AA and/or OSFI’S expectations for the AA

Question 3

Can CEO/COO be AA ?

Answer 3

yes if: authorized by OSFI
* (expiration of authorization is specified therein but cannot exceed 6 months)

Question 4

Identify 3 reasons why an Actuary would cease to hold the AA position.

Answer 4

• appointment revoked by Board of Directors
• resignation
• death
• the person ceases to be an actuary (Ex: FCIA designation revoked due to
disciplinary action)

Question 5

What must BoD do upon AA vacancy

Answer 5

Notify OSFI & fill vacancy

Question 6

What must AA do upon revocation/resignment

Answer 6

• write report outlining circumstances & reasons
• send to Board of Directors & OSFI

Question 7

What must prospective replacement AA do

Answer 7

• request written report on circumstances & reasons for prior AA leaving
• if not received in 15 days, new AA appointment may simply be accepted

Question 8

identify AA’s right to information & protection from liability

Answer 8

• AA may request records & explanations from
→ Board of Directors
→ officers
→ employees
• AA can’t be held liable for such good faith requests

Question 9

Describe the AA’s duty to report to the BoD

Answer 9

• provide report on Financial Position (annually)
• provide report on Financial Condition when directed by super

Question 10

Describe the AA’s duty to report to the CEO

Answer 10

• report on MAE (Material Adverse Events) that require recitification –> (CEO,CFO,cc:BoD)