NEWS
A guide to the new TAS suite By Ann Muldoon, director of actuarial policy at the FRC The Financial Reporting Council (FRC) published a revised suite of technical actuarial standards (TASs) in December 2016, which come into force on 1 July 2017. Actuaries should ensure they are aware of the changes and what they need to do to implement them. The new framework for TASs is shown below.
NEW TAS FRAMEWORK Framework for FRC actuarial standards TAS 100 Applies to all technical actuarial work TASs 200, 300, etc (Insurance, pensions, funeral plan trusts, other) Apply to areas of technical actuarial work, specified in specific TASs
Risk assessment process
Statement of recommended practice (SORPs), IFoA Guidance Framework for FRC technical actuarial standards A new overarching framework for FRC technical actuarial standards replaces the existing Scope & Authority of Technical Actuarial Standards. The framework sets out the historical context to the TASs as well as their scope and application. It also sets out the FRC’s reliability objective. It is important that actuaries consider this and the spirit of the TASs when applying them. The TASs should not result in gold-plating or unnecessary work being performed, but sufficient work should be completed to ensure that the reliability objective is achieved – even if this requires additional work beyond that necessary to comply with the TASs.
KESTEVEN PHOTOGRAPHY
THE RELIABILITY OBJECTIVE
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Users for whom actuarial information is created should be able to place a high degree of reliance on that information’s relevance, transparency of assumptions, completeness and comprehensibility, including the communication of any uncertainty inherent in the information.
TAS 100: Principles for technical actuarial work TAS 100 replaces the three existing generic TASs on data, modelling and reporting (TAS D, TAS M and TAS R). It has six high-level, outcome-focused principles with supporting provisions. The principles and provisions are, in the main, based on the principles in the existing TASs. TAS 100 is much shorter than the existing generic TASs, with supporting text removed and defined terms appearing in a new glossary of defined terms used in FRC technical actuarial standards. The most significant change, however, is that TAS 100 will apply to all technical actuarial work, while the current generic TASs only apply to work that is reserved to actuaries or work that is in the scope of a specific TAS. We consider that users are entitled to expect a minimum standard of technical actuarial work, and TAS 100 sets out that standard.
SCOPE OF TASs TAS 100
All technical actuarial work
Specific TASs
Work specified in the specific TAS
Specific TASs The revised specific TASs cover insurance, pensions and funeral plan trusts (TASs 200, 300 and 400). The insurance and pensions aspects of the transformations TAS are now in TAS 200 and TAS 300, as appropriate. The scope of the revised specific TASs covers technical actuarial work where the FRC considers that there is a high risk to the public interest. We have defined the scope of the specific TASs through a detailed risk assessment process. Some areas of work have been removed from scope but will still be subject to the minimum standards set by TAS 100. The revised TASs can be found at www.frc.org.uk/Our-Work/Audit-andActuarial-Regulation/Actuarial-Policy/ Technical-Actuarial-Standards-2017.aspx
existing TASs for work completed between 1 April and 1 July. This will be of help for pieces of work where it is uncertain when the work will be completed. For pensions actuaries, there are transitional arrangements for scheme funding exercises started before 1 October 2016. If such an exercise is completed after 1 July 2017, compliance with the existing TASs is permitted. Guidance The IFoA has published guidance to help its members with the interpretation and practical application of TAS 100. The guidance can be found at www. actuaries.org.uk/non-mandatory-guidance So what are the next steps for you? Actuaries should take action now to ensure that they are ready to implement the revised standards by 1 July 2017, or earlier if they wish to adopt the standards early. Actuaries and firms will need to: ● Identify any areas of their work that will, for the first time, be subject to TASs ● Review model reports and templates to ensure compliance with the revised TASs, and ● Review processes and procedures to ensure compliance with the revised TASs.
Transition The revised TASs come into force for technical actuarial work completed on or after 1 July 2017. For work not in the scope of current TASs, actuaries may wish to consider complying with the revised TASs for work completed before 1 July. For work that is in the scope of the current TASs, actuaries may comply with the new TASs instead of the
TAS 100 PRINCIPLES Judgement
Data
Assumptions Models
Communications
Documentation
THE ACTUARY • April 2017 www.theactuary.com
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03/04/2017 16:01