C4 - Disclosure and guidance

Question 1

When is information on the benefit arrangement disclosed to individuals?

Answer 1

PRICE
Payment of benefits
Request
Intervals
Combination
Entry to scheme

Question 2

Common aims in accounting standards

Answer 2

CARD
Consistency in accounting treatment year on year
Avoid distortions due to flow of contributions
Recognising realistic costs of benefits accruing
Disclosure of appropriate information

Question 3

Differences between accounting standards

Answer 3

• Relative importance of balance sheet and profit and loss accounting
• Choice of actuarial methodology
• Smoothing of year on year fluctuations
• Amount of information to be disclosed

Question 4

Items required to be disclosed in company accounts

Answer 4

• Assumptions used
• Actuarial method adopted
• Value of liabilities accruing over the year
• Increase in past service liabilities at start of year
• Investment return achieved over the year
• Surplus/deficit over the year
• Change in surplus/deficit over the year
• Directors pensions costs over the year

Question 5

How does a professional body ensure a minimum level of competence by the professional or a consistency in approach?

Answer 5

By issuing standards and guidance

Guidance may relate to application of professional conduct to specific aspects of the work of the actuary, including the interpretation of:

• relevant legislation
• relevant standards
• guidance issued by other professional bodies

Question 6

Areas where detailed disclosure may be required

Answer 6

• Benefit entitlements
• Contribution obligations
• Expense charges
• Investment strategy
• Risks involved
• Treatment of entitlements on insolvency

Question 7

Features of international accounting standards

Answer 7

• International Accounting Standards 19 (IAS19) attempts to produce a standard approach to accounting standards, in particular countries with no specific standard of their own
• Emphasis is towards the balance sheet and specifies a market based PUM is adopted
• Some specification of the approaches to the smoothing of costs and a requirement for more detailed disclosures

Question 8

Purpose of standards and guidance

Answer 8

Provide actuaries a framework to:

• Carry out responsibilities
• Maintain professional standards
• Ensure a minimum level of competence

Question 9

Guidance for overseas members of the IFoA

Answer 9

Advised to join the Actuarial body of the country in which they practise and should abide by any standards or guidance published by that body

Where no local body exists, should act in the spirit of UK guidance