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Old 06-25-2018, 02:20 PM
Puffd Puffd is offline
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Default Internal Audit Disclosure Statements?

I'm not sure if this is the best forum to post this to, but here goes.

My company recently added an internal audit (IA) actuarial role which I ended up in. It's their first actuarial IA role. My concern is that the standards CPAs/CFAs need for this line of work may differ from that of an ASA at some point.

○ With that said, when my name ends up on memos that go internally do I need to have some sort of disclosure statement in the memo? Originally I don't think I'd have been involved much in any final memos. More the fieldwork and questions towards clients. Therefore I don't think I'd personally be writing a statement of opinion at any time.
○ Does the fact it's internal and my ASA title likely wouldn't be listed change anything?

I have other questions but I don't want to bog things down here. I've read ASOP 21 a few times, but it seems directed towards an actuary working with IA/being audited rater than an actuary working in internal audit. I just feel a bit lost at the moment. I don't have any guidance on this and can't seem to find any online.

Thanks for any help anyone can offer.
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Old 06-25-2018, 04:14 PM
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Reviewing Actuary (IA) and Responding Actuary (being audited/examined by IA) role definitions in ASOP 21 seem relatively clear.

Note that other ASOP requirements are applicable, as appropriate, to the work of either/both Reviewing Actuary and Responding Actuary including those specified within ASOP 21 itself i.e., ASOP 41 excerpted below.


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SECTION 4. COMMUNICATIONS AND DISCLOSURES
4.1 COMMUNICATION AND DISCLOSURE
Both the reviewing actuary and the responding actuary should comply with ASOP No. 41, Actuarial Communications. The reviewing actuary and the responding actuary should include the following, as applicable, in their actuarial communications:

a. the disclosure in ASOP No. 41, section 4.2, if any material assumption or method was prescribed by applicable law (statutes, regulations, and other legally binding authority);

b. the disclosure in ASOP No. 41, section 4.3, if the actuary states reliance on other sources and thereby disclaims responsibility for any material assumption or method selected by a party other than the actuary; and

c. the disclosure in ASOP No. 41, section 4.4, if, in the actuary’s professional judgment, the actuary has otherwise deviated materially from the guidance of this ASOP.
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Old 06-26-2018, 09:41 AM
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I guess I've been confused a bit in what all needs put into it. Partly due to not having done an audit yet at the time of having to bring this up.

I'd be curious if IA actuaries largely use a slightly modified blanket disclosure statement or if they need to create one tailored per audit they are on. With deviations for material assumptions or from the ASOPs as you pointed out. I assume the source would always be disclosed when information is coming from clients.
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Old 06-26-2018, 09:50 AM
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I would reach out to an actuarial consulting firm that does audits and ask them for advice.
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Old 06-26-2018, 10:55 AM
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Originally Posted by Puffd View Post
○ With that said, when my name ends up on memos that go internally do I need to have some sort of disclosure statement in the memo?
You're auditing someone else's work.

So, you need to make sure that what they did follows the standards of the company and the ASOPs.

If everything is fine, you will have an actuarial communications stating what you reviewed, and how it aligns with the company standards and ASOPs.

If they deviate from the standards/ASOPs, you may have to do a separate analysis to see if you agree with their results. That analysis is an actuarial work product and needs to follow with ASOPs as well. If you find you agree with the deviation, you're back with writing a communication that documents what you did, why they deviated, how that is OK.

If they deviated and you don't agree with the results - then you pick up the phone and start having conversations.
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Old 06-26-2018, 05:05 PM
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You can reach out to the ABCD for advice, too.
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Old 06-27-2018, 03:17 AM
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I can tell you as a humble FAP student that actuaries are not auditors, per ASOP 23 (at least). Good luck
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Old 06-27-2018, 11:54 AM
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Originally Posted by BruteForce View Post
I would reach out to an actuarial consulting firm that does audits and ask them for advice.
I've been looking into that and asking around. I don't know anyone in particular so I may just need to blanket email or linkedin message at some point. Trying to see if the management at my company know anyone who would fit this criteria as well.

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Originally Posted by whisper View Post
You're auditing someone else's work.

So, you need to make sure that what they did follows the standards of the company and the ASOPs.

If everything is fine, you will have an actuarial communications stating what you reviewed, and how it aligns with the company standards and ASOPs.

If they deviate from the standards/ASOPs, you may have to do a separate analysis to see if you agree with their results. That analysis is an actuarial work product and needs to follow with ASOPs as well. If you find you agree with the deviation, you're back with writing a communication that documents what you did, why they deviated, how that is OK.

If they deviated and you don't agree with the results - then you pick up the phone and start having conversations.
Thanks, this helps Whisper. At least in terms of getting my thoughts in order. I don't only expect to be auditing other actuaries work. At times I would expect to be auditing non-actuaries. I'll keep in mind that any conclusions I draw will need to be from actuarial/company standards, while at the time time for example rationale for deviations possibly may include the standard of non-actuarial work products differing and being acceptable in said context.

It's been confusing to visualize in practice. I expect I'll need to substantially enhance the big picture view I've garnered in two years when it comes to beginning this new role.
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Old 06-27-2018, 11:58 AM
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Originally Posted by L. Mo View Post
You can reach out to the ABCD for advice, too.
This slipped my mind. I'll do that if the IA managers or myself cannot get in contact with an actuary doing an IA or external audit role. Or if I ever think I find myself in an area that's a bit too gray.
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Old 06-27-2018, 01:44 PM
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Quote:
Originally Posted by Puffd View Post
This slipped my mind. I'll do that if the IA managers or myself cannot get in contact with an actuary doing an IA or external audit role. Or if I ever think I find myself in an area that's a bit too gray.
Their advice will be pretty generic, certainly no more specific than what you have seen in this thread.
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