Card Set Information
Contexts where materiality matters
: whether or not an item needs to be considered
: whether or not a number is accurate enough to convey intended message
: whether or not a fact needs to be reported
an omission, understatement or overstatement is material if the actuary expects it materially to affect either the user’s decision making or reasonable expectations
the range of reasonable values in an actuarial estimate
the inherent uncertainty associated with actuarial estimates
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
Considerations when selecting materiality level
purpose of the work
: regulatory / appraisal / DCAT / financial statement etc.
: size / access to capital / stage of organizational life cycle
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?