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IAI Actuarial Core Principles · Business Management · Professionalism and ethics case studies

Karan, an appointed actuary, finds a material error in a reserving report he signed and which the regulator has already received. Management asks him to leave it, since the net effect on solvency is small and a correction would cause embarrassment. Which response best reflects professional standards?

Karan should promptly inform the employer and, as required, the regulator, issue a corrected report and document the matter. Leaving a known material error, correcting it quietly or later, or resigning silently would leave a misleading report in place and breach integrity duties.

  1. ALeave it, because the effect on solvency is small
  2. BCorrect it only in next year's report to avoid disruption
  3. CPromptly tell the employer and the regulator as required, issue a corrected report, and record the matterCorrect
  4. DCorrect the figure quietly in the file copy without telling anyone
  5. Resign and say nothing, so as to preserve confidentiality

Explanation

A known material error in a submitted report must be corrected openly. Waiting, quiet file changes or silent resignation leave the regulator relying on a misleading report. Embarrassment and a small solvency effect do not outweigh duties of integrity and compliance.

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