Presentation is loading. Please wait.

Presentation is loading. Please wait.

CIA Annual Meeting  Assemblée annuelle de l’ICA Auditing Guideline 43 Audit of Policy Liabilities of Insurance Enterprises Jim Christie, FCIA Session.

Published byDwain Barton Modified over 8 years ago

Similar presentations

Presentation on theme: "CIA Annual Meeting  Assemblée annuelle de l’ICA Auditing Guideline 43 Audit of Policy Liabilities of Insurance Enterprises Jim Christie, FCIA Session."— Presentation transcript:

1 CIA Annual Meeting  Assemblée annuelle de l’ICA Auditing Guideline 43 Audit of Policy Liabilities of Insurance Enterprises Jim Christie, FCIA Session PC-5 June 30, 2006

2 t Slide 2 General Audit Approach For actuarial liabilities, the audit must –Assess and test controls –Review assumptions for reasonableness –Perform some tests of calculations & models –Review results for reasonableness PC-5 on AuG-43

3 t Slide 3 Overview of Auditing Guideline 43 Provides guidance to external auditors when applying GAAS to policy liabilities of insurance enterprises Scope –Life insurers (replaces AuG 15) –P&C (new) –Workers Comp (new) –Reinsurers (new) –Excludes Pensions and Employee Benefits Effective for audits of fiscal years on or after January 1, 2006 PC-5 on AuG-43

4 t Slide 4 Major Impacts on Audit Process External Auditor can no longer rely on the work of the Appointed Actuary (§ 53) External Auditor may continue to use the work of the Appointed Actuary (§ 53) PC-5 on AuG-43

5 t Slide 5 Major Impacts on Audit Process Strong presumption that External Auditor will have Actuarial Specialist on engagement team (§ 8) Independence considerations mean the Appointed Actuary cannot be the Actuarial Specialist (§ 53) Requires corroborative evidence as the principal evidence for the auditor’s use of the AA’s work (§ 53) PC-5 on AuG-43

6 t Slide 6 Paragraph 4 The auditor's objective is to obtain sufficient appropriate evidence to provide reasonable assurance that the policy liabilities are reasonable within the context of the financial statements as a whole. PC-5 on AuG-43

7 t Slide 7 Paragraph 4 - continued In addition to performing appropriate procedures to test the calculation of the policy liabilities, the auditor also considers such factors as: the complexity and subjectivity involved in preparing the policy liabilities, the availability and reliability of data, the nature and extent of assumptions required and the degree of uncertainty of future events. PC-5 on AuG-43

8 t Slide 8 Paragraph 4 - continued Policy Liabilities are a point estimate rather than an estimated range Different actuaries are likely to arrive at different point estimates due to the inherent uncertainties and judgments required in making such estimates Estimates normally still within a reasonable range. PC-5 on AuG-43

9 t Slide 9 Paragraph 4 - continued Differences between such estimates are not necessarily indicative of error, where the estimates are within a reasonable range The auditor will need to consider a zone of reasonableness within which to accept the policy liabilities as being reasonable within the context of the financial statements as a whole PC-5 on AuG-43

10 t Slide 10 Determination of a Reasonable Range Implies that the actuarial specialist will need to recalculate some policy liabilities Extent of recalculation will depend –on nature of policy liabilities –internal control processes (such as SOX 404 or CPAB 52 -109) Shifts some responsibility from the AA to the External Auditor, in consultation with the Actuarial Specialist, that the actuarial liabilities are materially correct in the financial statements Auditor determines extent of recalculation needed PC-5 on AuG-43

11 t Slide 11 Implications Actuarial specialist has to have access to company’s actuarial database simultaneously with AA Actuarial specialist has to provide audit team with reasonable range of estimates PC-5 on AuG-43

12 t Slide 12 Issues Changes to Joint Policy Statement Duplication of effort between the audit and OSFI External Review processes CIA Practice Certificates for Actuarial Specialist may be require experienced FCIA PC-5 on AuG-43

13 t Slide 13 Issues Potential CIA Guidance to Actuarial Specialists Availability of sufficient number of independent actuaries Impact of additional actuarial review on the audit fees PC-5 on AuG-43

14 t Slide 14 Possible Company Initiatives What can company do to reduce actuarial efforts needed? –Strong internal controls have potential to mitigating impact –Better documentation of internal actuarial processes –Complete financial statements using actuarial support based on Q3 (or even Q2) data Additional internal actuarial effort PC-5 on AuG-43

15 t Slide 15 Questions? Jim Christie –416-943-3468 –jim.k.christie@ca.ey.comjim.k.christie@ca.ey.com PC-5 on AuG-43

Download ppt "CIA Annual Meeting  Assemblée annuelle de l’ICA Auditing Guideline 43 Audit of Policy Liabilities of Insurance Enterprises Jim Christie, FCIA Session."

Similar presentations

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Audit Evidence Week 11.

Audit Evidence Week 11.
FINANCIAL AUDIT METHODOLOGY PETER CARLILL UK NATIONAL AUDIT OFFICE.

FINANCIAL AUDIT METHODOLOGY PETER CARLILL UK NATIONAL AUDIT OFFICE.
CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario Session PC-1: Risk Transfer.

CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario Session PC-1: Risk Transfer.
CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario David Oakden PC – 5 Auditor’s Work / Actuary’s.

CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario David Oakden PC – 5 Auditor’s Work / Actuary’s.
©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens/Elder/Beasley 9 - 1 Materiality and Risk Chapter 9.

©2010 Prentice Hall Business Publishing, Auditing 13/e, Arens/Elder/Beasley Materiality and Risk Chapter 9.
Auditing Concepts.

Auditing Concepts.
2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver 2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver Canadian Institute of Actuaries Canadian.

2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver 2007 Annual Meeting ● Assemblée annuelle 2007 Vancouver Canadian Institute of Actuaries Canadian.
Learning Objectives LO1 Describe the current audit environment, including developments in regulatory oversight and provincial regulation of public accountants.

Learning Objectives LO1 Describe the current audit environment, including developments in regulatory oversight and provincial regulation of public accountants.
International Ethics Standards Board for Accountants Internal Audit Bob Franchini Paris June 2010 1.

International Ethics Standards Board for Accountants Internal Audit Bob Franchini Paris June
BA 427 – Assurance and Attestation Services Lecture 18 The Types of Services Offered by Public Accounting Firms.

BA 427 – Assurance and Attestation Services Lecture 18 The Types of Services Offered by Public Accounting Firms.
McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 21-1 Chapter 21 CHAPTER 21 ASSURANCE, ATTESTATION, AND OTHER FORMS OF SERVICES.

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved Chapter 21 CHAPTER 21 ASSURANCE, ATTESTATION, AND OTHER FORMS OF SERVICES.
CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario Session PEN-21.

CIA Annual Meeting Assemblée annuelle de l’ICA June 29 & 30, 2006  Les 29 et 30 juin 2006 Ottawa, Ontario Session PEN-21.
International Auditing and Assurance Standards Board Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures ISA Implementation.

International Auditing and Assurance Standards Board Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures ISA Implementation.
Current Developments at the PCAOB Ensuring Integrity: 3 rd Annual Auditing Conference at Baruch College December 4, 2008.

Current Developments at the PCAOB Ensuring Integrity: 3 rd Annual Auditing Conference at Baruch College December 4, 2008.
Review of Introduction to Auditing

Review of Introduction to Auditing
2-1 McGraw-Hill/Irwin ©2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 Professional Standards: “The Rules of the Road”

2-1 McGraw-Hill/Irwin ©2002 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 2 Professional Standards: “The Rules of the Road”
Auditing April 1, 2015 1 Chapter Two The CPA Profession just skim the section on Generally Accepted Auditing Standards Page 32-36.

Auditing April 1, Chapter Two The CPA Profession just skim the section on Generally Accepted Auditing Standards Page
Auditing A Risk-Based Approach To Conducting A Quality Audit

Auditing A Risk-Based Approach To Conducting A Quality Audit
18- 1 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 18 Integrated Audits of Internal Control (For Public Companies Under Sarbanes-Oxley.

18- 1 © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 18 Integrated Audits of Internal Control (For Public Companies Under Sarbanes-Oxley.

Similar presentations

Ads by Google