AAA Materiality

Question 1

identify considerations regarding the disclosure of materiality in actuarial communications

Answer 1

Sophistication of user
Importance of concept to user
Complexity of concept

Question 2

identify possible actions of a report-writer based on materiality

Answer 2

Include item?
- ask yourself whether the item should be considered
Refine item?
- ask yourself whether the item is sufficiently accurate
Disclose item?
- ask yourself whether the item should be reported

Question 3

Other considerations in setting a materiality level might include

Answer 3

F FINANCIAL strength
–
S SIZE (of entity)
T TYPE of business
A ACCESS (to capital)
R net RETENTION
S STAGE (of organization’s life cycle)