Skip to content

IAI Actuarial Core Principles · Business Management · Characteristics of a profession and the Actuaries' Code

Priya, a Fellow actuary, realises that a reserving report she issued six months ago contained a formula error that understated reserves by a material amount. The regulator has not noticed and the client has already filed the figures. Which response is most consistent with the Actuaries' Code?

Priya should promptly inform the client and help correct the position, communicating with other relevant parties as needed and documenting what was done. Integrity and the duty not to mislead mean a known material error cannot be left uncorrected or hidden in later reports.

  1. ASay nothing, as the report has been accepted and the filing is complete
  2. BCorrect the error only if the regulator raises a query
  3. CTell the client promptly, help them correct the position and communicate with the relevant parties as needed, while keeping a record of the actionCorrect
  4. DQuietly adjust next year's report to absorb the difference without mentioning the earlier error
  5. Tell only the regulator and withhold the matter from the client to preserve independence

Explanation

Integrity and the duty not to mislead require prompt disclosure of a material error to those relying on it, and help to correct it. Waiting or absorbing the difference silently perpetuates a misleading position. Bypassing the client would also breach the duty of proper communication.

Did you get it right without looking?

One question tells you little. A timed set on Characteristics of a profession and the Actuaries' Code shows your real accuracy, how long you take and where you lose marks.

Practise Characteristics of a profession and the Actuaries' CodeFree diagnostic mock

More Characteristics of a profession and the Actuaries' Code questions