Recent high profile material weakness disclosures have left some wondering: who’s next? The session will provide background on the causes and impacts of the material weakness and then focus on effective controls on financial reporting. We’ll spend most of the time discussing case study scenarios of common pitfalls when developing controls.
At the conclusion of the session, attendees will be able to:
• Identify the common causes of significant deficiency and material weakness audit opinions;
• Evaluate the impact of a material weakness assessment on audit fees and other financials; and
• Develop a plan to prevent or remediate a material weakness assessment.
Model Governance and Validation: Best Practices and Common PitfallsMarkSpong1
Modeling is the cornerstone of the actuarial profession. As insurance products grow in complexity, actuarial models too become increasingly complex and subsequently prone to errors. In this session, the presenter will go through common model governance frameworks in the life insurance industry, best practices and useful tools in model validation exercises, as well as common pitfalls of existing model risk management structures.
Layered Process Audits - The Compelling and Immediate ROIEase Inc.
Automotive and Aerospace manufacturing suppliers practice layered process audits to maintain quality control in increasingly demanding and challenging production environments. Learn the immediate ROI associated with this practice.
Model Governance and Validation: Best Practices and Common PitfallsMarkSpong1
Modeling is the cornerstone of the actuarial profession. As insurance products grow in complexity, actuarial models too become increasingly complex and subsequently prone to errors. In this session, the presenter will go through common model governance frameworks in the life insurance industry, best practices and useful tools in model validation exercises, as well as common pitfalls of existing model risk management structures.
Layered Process Audits - The Compelling and Immediate ROIEase Inc.
Automotive and Aerospace manufacturing suppliers practice layered process audits to maintain quality control in increasingly demanding and challenging production environments. Learn the immediate ROI associated with this practice.
Risk-based auditing is a style of auditing which focuses upon the analysis and management of risk. ... A traditional audit would focus upon the transactions which would make up financial statements such as the balance sheet. A risk-based approach will seek to identify risks with the greatest potential impact.
This explain the steps in the control process. #the functions of management. It also covers the requirements for effective control.
Why would one need a good control system
Je kunt niet verbeteren wat je niet ziet. Door gebruik te maken van Overall Equipment Effectiveness (OEE) wordt inzichtelijk gemaakt welke machine- en procesgerelateerde verliezen binnen uw organisatie moeten worden teruggedrongen. Maar een OEE-implementatie blijkt vaak geen eenvoudige opdracht!
OEE verdeelt de prestaties van een productie-eenheid in drie afzonderlijke, maar meetbare componenten: tijd, snelheid en kwaliteit. Elk onderdeel verwijst naar specifieke aspecten van het proces waarop verbetering kan worden gericht. Resultaten verbeter je echter niet door het in kaart brengen van OEE , maar ook actief te beheren.
In dit webinar heeft Gert Boeckmans aandacht voor de ergernissen die opduiken tijdens een OEE-implementatie. Hij deelt eerlijke en vlot toepasbare inzichten, waarmee u van uw volgende OEE-traject een instant succes zult maken.
Mike Marshall, PE (mtmarshall.llc@gmail.com) is an Oil & Gas industry consultant who has recently developed an EAM loss prevention and asset optimization software product derived from various spreadsheet-based tools (consisting of business methods, practices, KPIs, scorecards, reports, data maps/views, etc.) which were central to the actual asset performance optimization/management and process safety improvement metrics and methodologies he implemented while working for both Marathon (23 years) and Chevron (10 years).
Understanding Enterprise Quality Management Systems (EQMS)Sparta Systems
The quality software landscape has progressed to become enterprise-level solutions, whose integrated systems enable organizations to implement automated quality processes tailored to align with each of their specific products and business practices. This presentation from Sparta Systems explains the concept of Enterprise Quality Management Systems (EQMS).
Increase efficiency and productivity of the Audit Process. Learn how to effectively gain insight into risk. Learn how to reduce risk and improve the audit process.
Corrective Action – The Heart of Continuous QualityIBS America
In the latest managing continuous improvement webinar from IBS America, Inc., attendees learned how to use Corrective Actions to improve quality, enhance interdepartmental communications, and increase customer satisfaction.
In this webinar, we covered:
-Why Corrective Actions are important
-How to get the entire enterprise involved
-What tools you can use to manage the process
Visit the IBS Blog for more information and to register for our next webinar:
http://info.ibs-us.com
Energy Markets are at an inflection point: a flat global economy, pressure to grow revenue and profit, tighter regulations, and increased competition have significantly changed the way assets are operated. Internal inefficiencies, including lack of operationally relevant insight, still prevent companies from optimizing asset performance. Operators are challenged by a limited visibility into their assets’ data and often lack enhanced capabilities to quantitatively/qualitatively analyze the historical data and demonstrate value-added solutions.
In this second in a series of joint webinars on Asset Performance Management, GE Digital and Stork share the way they respond to the above challenges when it comes to Asset Reliability Management. They present a large scale case study practiced with a client active in the oil & gas industry and explain additional available solutions to the same questions.
2018 Val Act: Session 22 - Material weaknessAlex Hovi
Avoiding the material weakness: Case studies in developing effective controls.
Originally presented by Melanie Dunn and Mark Spong at the 2018 Valuation Actuary Symposium.
Software Quality Dashboard Benchmarking StudyJohn Carter
Software metrics best practices from a benchmarking assignment that indicates how software metrics are reported to management and used to drive behavior. We learned how leading companies used dashboards to report on quality progress and improvement results. We found the best organizations focused on the vital few metrics but also had automated systems with the ability to drill down on metrics at the divisional and team levels. In addition, the best normalized the metrics by number of customers or complexity. They systematically used root cause analysis to analyze bugs in the field. The SW Quality metrics often went beyond the strict definition of quality in that they also measured release predictability and feature expectations. Finally, the best companies used external benchmarks to set their quality targets.
Risk-based auditing is a style of auditing which focuses upon the analysis and management of risk. ... A traditional audit would focus upon the transactions which would make up financial statements such as the balance sheet. A risk-based approach will seek to identify risks with the greatest potential impact.
This explain the steps in the control process. #the functions of management. It also covers the requirements for effective control.
Why would one need a good control system
Je kunt niet verbeteren wat je niet ziet. Door gebruik te maken van Overall Equipment Effectiveness (OEE) wordt inzichtelijk gemaakt welke machine- en procesgerelateerde verliezen binnen uw organisatie moeten worden teruggedrongen. Maar een OEE-implementatie blijkt vaak geen eenvoudige opdracht!
OEE verdeelt de prestaties van een productie-eenheid in drie afzonderlijke, maar meetbare componenten: tijd, snelheid en kwaliteit. Elk onderdeel verwijst naar specifieke aspecten van het proces waarop verbetering kan worden gericht. Resultaten verbeter je echter niet door het in kaart brengen van OEE , maar ook actief te beheren.
In dit webinar heeft Gert Boeckmans aandacht voor de ergernissen die opduiken tijdens een OEE-implementatie. Hij deelt eerlijke en vlot toepasbare inzichten, waarmee u van uw volgende OEE-traject een instant succes zult maken.
Mike Marshall, PE (mtmarshall.llc@gmail.com) is an Oil & Gas industry consultant who has recently developed an EAM loss prevention and asset optimization software product derived from various spreadsheet-based tools (consisting of business methods, practices, KPIs, scorecards, reports, data maps/views, etc.) which were central to the actual asset performance optimization/management and process safety improvement metrics and methodologies he implemented while working for both Marathon (23 years) and Chevron (10 years).
Understanding Enterprise Quality Management Systems (EQMS)Sparta Systems
The quality software landscape has progressed to become enterprise-level solutions, whose integrated systems enable organizations to implement automated quality processes tailored to align with each of their specific products and business practices. This presentation from Sparta Systems explains the concept of Enterprise Quality Management Systems (EQMS).
Increase efficiency and productivity of the Audit Process. Learn how to effectively gain insight into risk. Learn how to reduce risk and improve the audit process.
Corrective Action – The Heart of Continuous QualityIBS America
In the latest managing continuous improvement webinar from IBS America, Inc., attendees learned how to use Corrective Actions to improve quality, enhance interdepartmental communications, and increase customer satisfaction.
In this webinar, we covered:
-Why Corrective Actions are important
-How to get the entire enterprise involved
-What tools you can use to manage the process
Visit the IBS Blog for more information and to register for our next webinar:
http://info.ibs-us.com
Energy Markets are at an inflection point: a flat global economy, pressure to grow revenue and profit, tighter regulations, and increased competition have significantly changed the way assets are operated. Internal inefficiencies, including lack of operationally relevant insight, still prevent companies from optimizing asset performance. Operators are challenged by a limited visibility into their assets’ data and often lack enhanced capabilities to quantitatively/qualitatively analyze the historical data and demonstrate value-added solutions.
In this second in a series of joint webinars on Asset Performance Management, GE Digital and Stork share the way they respond to the above challenges when it comes to Asset Reliability Management. They present a large scale case study practiced with a client active in the oil & gas industry and explain additional available solutions to the same questions.
2018 Val Act: Session 22 - Material weaknessAlex Hovi
Avoiding the material weakness: Case studies in developing effective controls.
Originally presented by Melanie Dunn and Mark Spong at the 2018 Valuation Actuary Symposium.
Software Quality Dashboard Benchmarking StudyJohn Carter
Software metrics best practices from a benchmarking assignment that indicates how software metrics are reported to management and used to drive behavior. We learned how leading companies used dashboards to report on quality progress and improvement results. We found the best organizations focused on the vital few metrics but also had automated systems with the ability to drill down on metrics at the divisional and team levels. In addition, the best normalized the metrics by number of customers or complexity. They systematically used root cause analysis to analyze bugs in the field. The SW Quality metrics often went beyond the strict definition of quality in that they also measured release predictability and feature expectations. Finally, the best companies used external benchmarks to set their quality targets.
Has your organization ever considered replacing a tester that did not write, for example, 15 test cases per day? Is the testing team blamed if defect leakage is greater than 5% into production? What drives decisions like these? The common thread in these examples is “Test Metrics”
Test Metrics... Everyone has an opinion about them. Some believe they are the most valuable way to communicate the results of testing. Some think that they are useless, misleading, and damaging to the communication of test results. Some believe that without measurement you are not managing the effort. And some believe that bad metrics are worse than no metrics at all.
Where does your organization fit in the metrics and measurement debates? Is your team aligned? Do you agree with the team? Do you use a reporting process for test results? Are you forced to report on metrics you don't believe are valuable? Do you have dozens of metrics that you are reporting periodically that no one looks at, and when they do look at them, there is room for misinterpretation?
In this session, Mike Lyles and Jay Philips will challenge the audience to discuss the topic of metrics and measurement, review multiple viewpoints on the topic, and address many of the questions that organizations have today around metrics and measurement.
Takeaways:
- Top metrics that are misused or misunderstood in most every organization.
- Metrics that you should you get rid of ASAP!
- Best and Worst metrics - based on opinions of the speakers & audience.
- Metrics that everyone should use – and how they compare to your organization’s metrics.
- Tools and processes that can help your organization better measure your testing.
** Presentation given at STPCon Spring 2014
Building the Tax Team of the Future to Navigate the Storm of Regulatory Change Sovos
As tax moves from a back-office function to an integrated and strategic position, tax professionals must have a data-driven, business, and security mindset.
Watch onDemand by using this link: https://goo.gl/8trFsv
Microsoft Dynamics AX Implementation Stabilization Case Studiesmeritweb
Learn about the risks, challenges, and best practices for implementing Microsoft Dynamics AX in enterprise manufacturing and supply chain environments. Hear about a couple of our Microsoft Dynamics AX implementation stabilization case studies.
Hanrick Curran Audit Training - Internal Controls - March 2013Matthew Green
Training delivered to assisting audit staff as part of their continuing professional development/education (CPE/CPD). Provided in a 60 minute session with substantial discussion and interaction.
INDUSTRIAL MANAGEMENT.
Controlling ensures that there is effective and efficient utilization of organizational resources so as to achieve the planned goals.
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
The European Unemployment Puzzle: implications from population aging
2018 ValAct - Session 22 - Material Weakness
1. Session 22PD:
Avoiding the material weakness:
Case studies in developing effective
controls
MELANIE DUNN, FSA, MAAA
MARK SPONG, FSA, CERA, MAAA
August 27, 2018
2. The material weakness may be more common than you think
A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of
the company's annual or interim financial statements will not be
prevented or detected on a timely basis
A significant deficiency is a single weakness or a combination
of weaknesses in the internal controls associated with financial
reporting, that is less severe than a material control weakness
and yet is sufficient to merit the scrutiny of those responsible for
administering an entity's financial reporting
*Source: Auditing Standard No. 5, Public Company Accounting Oversight Board
4. Annual assumption review
Historical examples of material weakness triggers
Discovery of a material financial misstatement
often indicates a weakness in underlying
controls on financial reporting.
Material misstatements
In 2015, Phoenix reported a material
restatement to 2013 financials due to an error
in the 2013 annual assumption review.
In March of 2018, MetLife disclosed a material
weakness after reserves on a VA block were
determined to be too high and released.
Releasing excess reserves
In 2015, Genworth disclosed insufficient controls
on implementation of methodology and
assumption changes for LTC claim reserves.
Controls on methodology changes
5. Market Reputation Financial
Remediation
effort
Stock price
drop
Lack of trust Costs of
remediation
Strategic priorities
must be shifted
How would you, your team, and your department be affected by a
material weakness?
Impacts of a material weakness
Morale
Positive outlook
eroded
8. Spreadsheet SNAFU
“This isn’t a model, it just organizes the results. The
governance standards for models would be overkill!”
• The valuation model works flawlessly with top notch
controls
• Results are dumped into Excel, transformed into usable
form, and aggregated with other products via links and
macros
• But business day 8 comes along:
– A last minute update to the process is not flowing
through correctly
– New products are not captured
– Balances are transposed
During the normal course of quarter close, management is
not able to prevent misstatements on a timely basis.
1
WHAT • What are the control standards at your
company for End User Computing
applications, such as Excel?
2
• Models are usually defined as having input,
processing and output components. Why
does End User Computing tend to fall under
the radar?
WHY
3
• How can actuaries structure and design
controls to address the underlying issue?
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol
9. Assumption Malfunction
“We update lapse and mortality every year and have a clear
oversight process. The other assumptions still seem
appropriate.”
• The assumption inventory for a critical high risk model
appears to be complete and annually reviewed
• The model is complex and certain assumptions
associated with mean reversion are not well understood
by the assumption review committee
• As a result, there is a lower degree of scrutiny on those
assumptions plus lack of scrutiny on implicit
assumptions
• The result is economic simulations that are not reflective
of the prolonged low interest rate environment
The assumption review process was not designed to place
sufficient scrutiny on technical aspects of modeling design.
1
2
3
• Why might controls around assumption
management be challenging to keep up?
• How can actuaries structure and design
controls to address the underlying issue?
WHAT • What do the assumption review and update
process look like at your company?
WHY
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol
10. Hand-off Hardships
“We are the model owners and they are the model users”
• A domestic actuary is the “model owner” for a model and
operation is outsourced to a “model user” in another country
• Hand-offs of model updates and review occur over email, since
the model owner and model user don’t work the same hours
• While attributing impacts between quarters, the model owner
discovers an error from incorrectly mapping new issues during
routine updates in Q2
• The model user hadn’t been educated on model governance
requirements, and didn’t know what level of review was
required for the mapping updates
• The model owner didn’t know that the mapping updates had
been made, and didn’t review them in Q2
Hand-offs have increased risk, and effective controls execution
requires clear standards for communication when processes and
data get handed off.
1
WHAT • What does a hand-off look like during
quarter end at your company?
2
• Why is just emailing someone a model
with quarter close updates a problem?
WHY
3
• How can actuaries structure and design
controls to address the underlying
issue?
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol
11. Data Disaster
“Of course we do reasonability checks on the inforce data,
but we don’t have time to completely audit it”
• The admin system is dropping a small number of
policies each quarter in the inforce data feed
• Data controls are focused on quarter over quarter
changes of counts and face amounts, so nothing stands
out
• After 18-24 months reserve balances are significantly
off
The existing control was operating as designed but still did
not meet the objective and reserves are misstated.
1
WHAT • What data quality checks would you
realistically expect to routinely run on
inforce files?
2
• Big changes from period to period are
noticeable. Why might small changes like
this still constitute a significant deficiency?
WHY
3
• How can actuaries structure and design
controls to address the underlying issue?
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol
12. Modeling Mishap
“I’m just relying on what the pricing team provided”
• After pricing a new product, the pricing team hands off
the pricing model to valuation
• Valuation independently defines business requirements
for the inforce model and determines whether any
features not modeled for pricing need to be modeled
• Risk and modeling teams are not involved
• The risk team just checks the results at the end
• Since pricing decisions are made before valuation,
modeling, and risk become involved, those stakeholders
do not have input into the decisions
This may result in modeling and risk teams that do not have
the practical authority to design and perform effective
controls.
1
WHEN • How early do the risk, modeling, and
valuation teams get involved in the pricing
process at your company?
2
• Why might the pricing team have more
influence within the organization?
WHY
3
• How can actuaries coordinate between
teams to address the underlying issue?
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol
13. Error Emergency
“We continuously keep track of modeling issues and address
them as soon as possible”
• An analyst finds a potential coding error in a production
model on business day 3, two days before results are booked
• There is limited time to thoroughly investigate to confirm the
error or to assess its materiality
• Multiple team members work late and the root cause
appears to be identified and reasonable to address
• A fix is implemented just in time and the impact on financials
is attributed to a methodology enhancement
• After quarter close, it was discovered that the change had
unintended consequences for related products
No emergency protocol was in place to guide action when an
issue was found during quarter close.
1
WHAT • What is the emergency procedure at your
company if an issue is found during the
quarter close process? Is it a formalized or
informal procedure?
2
• Why is it a problem to rely on a judgment
call from management when an issue pops
up during quarter close?
WHY
3
• How can actuaries structure and design
controls to address the underlying issue?
HOW
End User Computing Hand-offsAssumptions
Model StakeholdersData Emergency Protocol