1. Canadian Institute of Actuaries L’Institut canadien des actuaires
2006 Seminar for the Appointed Actuary
Colloque pour l’actuaire désigné 2006

2. Materiality – Presentation Outline
Background
AAA Task Force
AAA Task Force – Goals, Members, and Procedures
AAA Paper – Table of Contents
AAA Paper – Key Points
AAA Paper – Appendix
CIA Task Force
CIA Task Force – Goals, Members, and Procedures
CIA Task Force – Progress Report

3. Materiality – Background
Prior US experience
Unfamiliar with concept of materiality
Raised questions at AA seminar
Approached by CIA Property & Casualty Financial Reporting Committee
All research led to US
AAA Task Force
CIA Task Force

4. Materiality – AAA Task Force Goals, Members, and Procedures
Goal: Create a Discussion Paper not a Professional Standard Task Force:
Members of all practice areas
Members from different types of employers
Conference calls every other week for 4 months
Draft paper December 2005
Final paper spring 2006

5. Materiality – AAA Paper Table of Contents
Preface
Background
Purpose and Scope
Defining Materiality
Reflecting Upon Materiality: User is Key
Applying Judgment About Materiality
Accounting vs. Actuarial Materiality
Communication and Disclosure
Appendix: Helpful Sources for Use in Selecting Materiality Levels

6. Materiality – AAA Paper Key Points
No Standard of Practice in US on materiality
Concept of materiality applies to all practice areas and all actuarial work
Generalized description of materiality: An omission, understatement or overstatement in a work product is material if it is likely to affect either the user’s decision-making or the user’s reasonable expectations.
User means intended audience

7. Materiality – AAA Paper Key Points (continued)
Materiality is different from:
The range of reasonable values in an actuarial estimate, and
The inherent uncertainty associated with actuarial estimates
User perspective is typically the key element in determination of materiality
Definition of intended audience

8. Materiality – AAA Paper Key Points (continued)
Materiality tends to be more task-specific than practice-specific
Single vs. multiple levels of materiality
Change in materiality from year to year
Audit and actuarial materiality
Communication and disclosure

9. Materiality – AAA Paper Appendix
Peter D. Arthur (CIA)
AAA ASOP
CIA CSOP
Court decisions
FASB
IAS
Mary D. Miller (CLRS)
CAS Committee on Valuation, Finance, and Investments
NAIC
SEC

10. Materiality – CIA Task Force Goals, Members, and Procedures
Goal: Create a Discussion Paper not a Professional Standard
Members:
Mike Lombardi
Isabelle Perigny
Joel Cohen
Paul Della Penna
Paul McCrossan
Jean-Marc Leveille
Patricia Hladun
Kevin Lee
Randy Dutka
Conference calls throughout summer – also have audit practitioner participation at times

11. Materiality – CIA Task Force Progress Report