Academy Comments on Revised Regs for EAs
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N SEPT. 28, THE ACADEMY’S Pen-
sion Practice Council, in coordination with members of the Academy’s Council on Professionalism, commented to the Joint Board for the Enrollment of Actuaries on potential revisions to regulations governing services provided by enrolled actuaries under ERISA. The Academy’s comments covered issues about enrollment and the renewal of enrollment; regulations on continuing professional education; types of enrollment statuses; and standards of conduct, performance, and practice. Key issues identified in the Academy’s comment letter include: ® The clarification and expansion of how core and non-core subject matter for continuing education is defined. The Academy suggested that core material include
Internal Revenue Code Sections 419, 419a, and 420, as well as subject matter on pension plan design, investment, finance, risk theory, and pension solvency issues. For non-core subject matter, the Academy recommended an expansion to include work dealing with accounting for retirement benefits other than pensions and consulting skills. ® How EA exams cover the selection of assumptions, specifically for asset rates of return. Given the difficulty of testing the subject with a standard multiple-choice exam, members of the Academy volunteered to assist the joint board’s advisory committee in developing appropriate exam material. ® The modification of regulations to permit the joint board to contract with the Actuarial Board for Counseling and Discipline (ABCD) for the investigation of complaints
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against actuaries. Alternatively, the regulations could require each EA to join at least one actuarial organization within a year of enrollment and to maintain that membership—thereby becoming subject to the Code of Professional Conduct. The Academy also suggested that if this alternative is not feasible, the joint board could incorporate aspects of the code into its regulations. In a subsequent attachment, the Academy provided a document comparing joint board regulations with the code. ® The requirement of a minimum number of continuing education credits dedicated to professionalism issues, as a means of ensuring that EAs remain cognizant of professional issues that arise in everyday practice. — HEATHER JERBI
(ASB) was busy at its health filings for state insurance or health departments, the federal September meeting, approving one final revised Actu- government, and other regulatory bodies. The comment deadline arial Standard of Practice (ASOP) and three exposure is March 31, 2005. The second exposure draft is a proposed redrafts, two drafts for first exposure, and another for a vision of ASOP No. 12, Risk Classification for All Practice Areas, second exposure. which applies to actuaries when designing, reviewing, or changing Paper copies of the final standard and the exposure drafts are risk classification systems related to financial or personal security enclosed with this mailing of the Update, along with an updated systems regarding the classification of individuals or entities into version of the ASB’s CD-ROM, containing all standards and related groups to reflect the relative likelihood of expected outcomes. Proprofessionalism documents. fessional services that may fall under the Receiving final approval at the proposed standard include expert testiAn updated version of the September meeting was the revision of mony, regulatory and legislative activiASOP No. 21, Responding to or Assistties, and statements concerning public CD-ROM containing all ing Auditors or Examiners in Connection policy. The comment deadline for this with Financial Statements for All Practice exposure draft is March 15, 2005. standards and related Areas. This standard applies to actuarIn addition, the ASB is also exposprofessionalism documents is ies in all practice areas when providing ing for second comment a proposed professional services as a responding revision of ASOP No. 11, Financial enclosed with this Update. actuary or reviewing actuary in connecStatement Treatment of Reinsurance tion with an audit or examination of a Transactions Involving Life or Health Infinancial statement. The standard doesn’t apply to actuaries when surance. One key change made from the first exposure draft is providing services in connection with filings, such as tax returns the clarification that the proposed standard would apply when or Form 5500 filings, which may contain financial information but property/casualty companies reinsure life or health insurance. do not constitute financial statements as defined in the standard. Also, if a reinsurance transaction involves both life or health The standard becomes effective on April 30, 2005. While this insurance and P/C insurance, the actuary should use professional standard isn’t included in the new CD-ROM, it can be downloaded judgment to determine whether ASOP No. 11, ASOP No. 36 on from the ASB website at www.actuarialstandardsboard.org. P/C reserving, or aspects of both would apply. The second expoNow open for your comments are two new exposure drafts. sure draft will be available for comment until March 31, 2005, The first is a proposed revision of ASOP No. 8, Regulatory Filings and P/C actuaries are encouraged to review the clarification of for Health Plan Entities, which applies to actuaries when perform- the scope and to comment as needed. ing professional services with respect to preparing or reviewing —CAREN CLARK
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HE ACTUARIAL STANDARDS BOARD
A c t u a r i a l U P D AT E
November 2004