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

Sanjay, an actuary, writes a report for a client using data supplied by the client's claims department. He did not audit the data but noticed some unexplained gaps in policy start dates. What should his report do?

The report should describe the data used, the checks performed, the gaps found, the reliance placed on the client and the likely effect on results. Transparent disclosure of data limitations lets users judge the advice, whereas silence or hidden assumptions would mislead them.

  1. AAssume the gaps are immaterial and make no mention of them
  2. BState the data used, the checks done, the gaps found and any reliance placed on the client, along with the effect on the resultsCorrect
  3. CRefuse to issue any report until the client corrects every gap
  4. DSay that the client alone is responsible for the data, so no further comment is required
  5. Fill the gaps with his own guesses and present the data as complete

Explanation

Professional reporting should be transparent about data sources, checks, limitations and reliance, so users can judge the results. Staying silent or presenting guesses as complete data misleads. Refusing outright is not required, and shifting all responsibility to the client ignores his duty to disclose known issues.

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