CIA Materiality

Card Set Information

Author:
ED_6C3
ID:
270373
Filename:
CIA Materiality
Updated:
2014-04-12 20:21:48
Tags:
6C
Folders:
CIA Requirements
Description:
6C
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  1. Contexts where materiality matters
    • inclusion: whether or not an item needs to be considered
    • refinement: whether or not a number is accurate enough to convey intended message
    • disclosure: whether or not a fact needs to be reported
  2. Materiality definition
    • an omission, understatement or overstatement is material if the actuary expects it materially to affect either the user’s decision making or reasonable expectations 
    • it is not the range of reasonable values in an actuarial estimate
    • it is not the inherent uncertainty associated with actuarial estimates
  3. User is key
    • user's perspective is typically the key element in materiality determinations
    • actuary is not responsible to unintended users 
    • take reasonable steps to ensure that the work does not mislead the intended users 
    • consider who are the intended users, their knowledge and situation
  4. Considerations when selecting materiality level
    • purpose of the work: regulatory / appraisal / DCAT / financial statement etc.
    • company characteristics: size / access to capital / stage of organizational life cycle
  5. Areas for further research
    • how does materiality relate to range of reasonable values and inherent uncertainty?
    • should the actuary treat materiality differently in a internal user report?
    • should the actuary consider disclosure about application of materiality?
    • what communication is required when there is no written report?

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