Test Your Professionalism IQ

Have you always had trouble with multiple choice?

Have you always had trouble with multiple choice?

If it has been awhile since you earned your actuarial credentials—and if you enjoyed taking exams as much as I did—this article should be entertaining as well as educational. In a nod to nostalgia, I have created an older-style exam; rather than short-answer format, it consists of six multiple–choice questions and four true/false questions. You can find the answers on page 20, along with explanation as appropriate.

Note that “Code” refers to the Code of Professional Conduct, “ASOP” to actuarial standard of practice, and “USQS” to Qualification Standards for Actuaries Issuing Statements of Actuarial Opinion in the United States, Including Continuing Education Requirements. And Actuary (with a capital A) refers to an actuary who is a member of at least one of the five recognized U.S.-based actuarial organizations.

Multiple Choice (select one answer)

Question 1

Which of the following are considered binding guidance for actuaries who are members of at least one of the five recognized North American actuarial organizations?

1. The Code
2. ASOPs
4. Practice notes of the American Academy of Actuaries

Question 2

In order to be qualified to perform a particular service, an actuary must:

1. Meet applicable qualification standards
2. Be able to look at oneself and say "I am qualified to do this work"
3. Be familiar with every ASOP

Which of the above phrases completes a true statement?

Question 3

Which of the following could be a potential material violation of the Code:

1. Refusal to disclose confidential information
2. Understating reserves due to management pressure
3. Intentionally failing to file personal tax returns
4. Refusal to cooperate with a successor actuary

Question 4

Which of the following are true with respect to the USQS:

1. The General Qualification Standard applies to actuaries issuing any Statement of Actuarial Opinion
2. The Specific Qualification Standard applies to actuaries issuing three specific opinions only
3. In order to meet the Specific Qualification Standard, an actuary must first meet the General Qualification Standard
4. The USQS do not apply to non-actuarial services

Question 5

Under Precept 13 of the Code, an Actuary with “knowledge of an apparent, unresolved, material violation of the Code by another Actuary” is obligated to:

1. Discuss the situation with the other Actuary in an attempt to resolve it
2. Report the apparent violation to the ABCD whether resolved or not
3. Report the apparent violation even if such action would be contrary to Law

Question 6

ASOP No. 41, Actuarial Communications, along with Precept 4 of the Code, is one standard that will apply to virtually all actuarial services. “Section 4. Communications and Disclosures” in ASOP No. 41 contains four subsections: 4.1 discusses the disclosures that should be in any actuarial communication; section 4.2 discusses “Certain Assumptions or Methods Prescribed by Law”; section 4.3 is “Responsibility for Assumptions and Methods”; and section 4.4 covers “Deviation from the Guidance of an ASOP.” The Actuarial Standards Board has brought consistency to the format of ASOPs, including a “Communications and Disclosures” section in each ASOP. The “Communications and Disclosures” sections in other ASOPs, in addition to providing guidance specific to that ASOP, refer the Actuary to ASOP No. 41 Section 4, including specific reference to sections 4.2, 4.3, and 4.4 described above. Concerning these three sections, which of the following statements are true?

1. Section 4.2 requires, where assumptions are set by law, that the actuary estimate the impact of using assumptions he or she believes are reasonable, if practicable
2. Section 4.3 describes what must be disclosed, where in situations other than described in section 4.2, the actuary states reliance on other sources for assumptions and/or methods
3. Section 4.4 describes how an actuary can comply with a particular ASOP, even where, in the actuary’s professional judgment, the actuary has deviated materially

True or False (Select one answer—note there is one trick question!)

Question 7

Actuaries who designate themselves as “retired” in the actuarial directory may perform actuarial services, including issuing statements of actuarial opinion, on occasion without meeting the continuing education requirements of the USQS, as long as they meet all other requirements, met the continuing education requirements when they were working full time, and currently qualify for dues waivers based on age.

Question 8

Enrolled Actuaries are bound by the Code.

Question 9

Discussion papers issued by the Academy’s Council on Professionalism provide useful guidance but are not binding upon actuaries.

Question 10

An actuary in a senior management position who is no longer providing “actuarial services” (as defined in the Code) is not bound by the Code.

ALLAN RYAN is a member of the Actuarial Board for Counseling and Discipline.

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