CIA (e)Bulletin/(e)Bulletin de l'ICA
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June 2015
 
 

Different Documents Convey Important Messages

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By Bruce Langstroth, FCIA

I had cause the other day to reflect upon the significance of educational notes and research papers—the principal output of the Practice Council and its committees. The cause was a discipline case—so, of course, I will not share specifics. But I will say that one issue that emerged was a perspective on educational notes that was different than mine and, I hope, the large majority of the profession. So, it seems appropriate to share.

Actuarial practice in Canada is governed by standards, educational notes, and research papers. But these do not carry equal weight or significance.

Most important are the standards. Standards of Practice articulate elements of practice that practitioners are expected to comply with. They are minimum requirements that must be satisfied. Practice that deviates from the standards is not permitted except in very limited circumstances.

Educational notes generally describe one or more practices that conform to the standards and serve to narrow the potential range of practice that may conform with the standards. The practice or practices described in an educational note represent accepted actuarial practice and an actuary whose practice conforms with an educational note can usually assume that they are complying with the standards. Educational notes, however, are not intended to be an exhaustive description of acceptable practices and a practitioner may deviate from an educational note provided they can justify the practice that they apply.

Research papers can cover a broad range of topics but generally fall into one of two categories: (1) description of a practice or practices that may be acceptable, and/or (2) documentation of work that was done to support either a standard or an educational note. In either case, practices described in a research paper may be applied by a practitioner provided they are satisfied that they conform to the standards.

One might think of standards, educational notes, and research papers in conjunction with the words "must", "should", and "may". Practice must conform to the standards and deviations are not permitted. Practice should conform with educational notes but it is permissible to deviate from them with an appropriate justification. Finally, practice may conform to research papers but it is not expected that practitioners will do so.

It is necessary, but not sufficient, to be familiar with the Standards of Practice that apply to one’s practice area. A practitioner will also be expected to be familiar with the educational notes that relate to his or her area of practice and to either apply them or to justify alternate practices. While familiarity with research papers is obviously good, it is not required for good practice.

In summary, then, a practitioner must be aware of applicable standards and educational notes in their practice area and ensure that their practice conforms to the standards and either conforms to the educational notes or can justify alternative practices as being compliant with the standards. Application of research papers is not necessary for good practice and a practitioner seeking to apply practices described in research papers should be certain that they comply with the standards.

Bruce Langstroth, FCIA, is Chair of the Practice Council.

 

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