CIA.AA - IFRS 17

Question 1

describe the responsibilities of AA that have not changed under IFRS17

Answer 1

POOR-AA
- Policy liability: defn and coverage of policy liabilities are unchanged
- Opinions: continues to provide opinions on policy liability
- Others: relies on and provides work for others
- Reporting: creates formal reports to regulators
- Appoint: AA’s role remains reserved and requires formal appointment
- AAP: ensures policy liabilities calculation follows AAP

Question 2

what sort of report would AA issue if they used but did not take responsibility of the work of others?

Answer 2

AA would issue a report with reservations

Question 3

what sort of report would AA issue if they used and took responsibility of the work of others?

Answer 3

AA would issue a report without reservations
assuming everything else regarding the policy liabilities was in order

Question 4

describe situations where AA would use but not take responsibility for the work of others

Answer 4

• if work conflicts with what would be appropriate for purpose of actuarial services
• if actuary is unable to judge the appropriateness of the work including assumptions and methodology

Question 5

describe situations where AA would use and take responsibility for the work of others

Answer 5

when such actions are justified and based on considerations such as
- communication with other person is early and periodic
- confidence in the other person’s qualification
- awareness by the other person the actuary is using his/her work

Question 6

identify 12 items (accounting policies, methods, assumptions) that may be set by someone other than AA

Answer 6

12 items track CD, LIAREP (CCDDD LIAREP)
- Contract boundary
- Coverage units for amortization of CSM
- Discount rate
- Directly attributable expense
- Deferred acquisition expense
- Level of aggregation
- Insurance contract liability
- Application of VFA
- RA for non-financial risk
- Eligibility of PAA
- PAA accounting policy choices

Question 7

list questions AAA might ask to determine whether to take responsibility of the work of others

Answer 7

• is the work consistent with a reasonable interpretation of IFRS standard?
• is the work consistent with AAP practice in Canada?
• has AA confirmed to the other person’s qualifications and awareness of how the work is being used?
• is the work similar to what the AA would have done?
• is the AA able to judge the appropriateness of work? (without substantial amount of additional work)

Question 8

identify examples of situations where it may be appropriate to report with reservation

Answer 8

CLINTOn
- Change in AM affecting disclosure items: where an item valued by the actuary is materially affected by a change in AM that is not disclosed in FS
- Liability different than calculation by the actuary: where FS of an insurer report policy liabilities that are materially different from those calculated and reported to the regulator by AA
- Impracticality of restatement: where restating the preceding year valuation to be consistent with current year valuation would be appropriate but not practical
- New appointment: where newly appointed AA uses but is unable to take responsibility of a processor AA’s work
- Takeover of insurer with insufficient records

Question 9

what is the standard wording for AA’s opinion according to IFRS17?

Answer 9

To the policyholders and shareholders of ABC Insurance Company
- I HAVE VALUED the policy liabilities of the company for its consolidated financial statements prepared
- IN ACCORDANCE WITH IFRS for the year ended…
- IN MY OPINION, the AMOUNT of policy liabilities IS APPROPRIATE for this purpose
- the valuation conforms to AAP in Canada and the consolidated financial statements fairly present the results of the valuation

Question 10

describe 3 differences in the wording of AA’s opinion under IFRS17 VS. old standard IFRS4

Answer 10

1) IFRS Compliance:
- revised opinion stresses policy liabilities valuation complies with relevant IFRS standards
2) Appropriate for Financial Statements
- AA no longer opines that liabilities make “appropriate provision for all policy obligations”
- instead AA now asserts the amount of policy liabilities is appropriate for inclusion in financial statements
3) Broader Scope
- the scope of “ fairly present” in the AA’s opinion is broader under IFRS17
- this reflects more extensive presentation and disclosure requirements

Question 11

case studies