C - CIA Subsequent Events

Question 1

CIA SUBSEQUENT EVENTS

Define subsequent event

Answer 1

event the actuary FIRST BECOME AWARE after the calculation date, but before the report date

Question 2

CIA SUBSEQUENT EVENTS

Contrast calculation date vs the report date

Answer 2

• Calculation date: Balance sheet date
• Report date: Date on which the actuary completes the report on his work and communicates USERS about his work.

Question 3

CIA SUBSEQUENT EVENTS

The actuary should take a subsequent event into account if the subsequent event (3) :

Answer 3

1. Provides information about the entity as it was at the calculation date OR
2. Retroactively make the entity different at the calculation date OR
3. Makes the entity different after the calculation date and a purpose of the work is to report on the entity as it will be as a result of the event.

Question 4

CIA SUBSEQUENT EVENTS

Contrast Adjusting Events and Non Adjusting Events

Answer 4

• ADJUSTING EVENTS: Conditions that existed at the calculation date
• NON-ADJUSTING EVENTS: Conditions that arose after the calculation date

Question 5

CIA SUBSEQUENT EVENTS

In general, what would accounting standards require : for adjusting events? for non-adjusting events?

Answer 5

1. ADJUSTING EVENTS
   
   • If material, reflect event in the work
2. NON-ADJUSTING EVENTS
   
   • If material, disclose in the notes to the financial statement about:
     
     1. Nature of the event
     2. Estimate of financial effect of the event.

Question 6

CIA SUBSEQUENT EVENTS

What should actuary do if subsequent event is from a material data defect or calculation error?

Answer 6

1. Reflect in work
2. Communicate it to management and auditor

Question 7

CIA SUBSEQUENT EVENTS

2 items that should be disclosed in the notes to the financial statements after a subsequent event

Answer 7

1. Nature of the event
2. Estimate of financial effect
   
   • Or statement that such an estimate cannot be calculated
   • Discussion about impact of the event on future results of company.

Question 8

CIA SUBSEQUENT EVENTS

Compare level of actuarial materiality vs auditor materiality

Answer 8

Actuary materiality level to be lower than audit materiality level