Course on Professionalism

1. Course on Professionalism ASOP - Introduction

2. Outline • Perspectives on Professions • History of Standards • Standards of Practice

3. Perspectives on Professions • Essential Characteristic of a Profession • Expertise in area where professional services are performed • Requirements • Setting selective standards for admission • Training for the attainment of professional competence • An organization to test such competence • Standards of conduct and practice

4. Why Professions Exist One person can’t know everything Need to spend years acquiring expertise in a given field Society must rely on professionals Since only experts in field understand the profession, professions must self-regulate Need to establish standards of practice and conduct in order to ensure that work products produced by different professionals are of a similarly high quality

5. History of Standards • 1954: SOA update of Guides to Professional Conduct (covered only general principles & precepts) • 1956: Conference of Actuaries in Public Practice: Code of Professional Conduct

6. History of Standards • 1965: AAA formed; issued its own “Code”: • Professional Duty • Member’s responsibility to his/her principal • Relationship with principal • Impartiality & independence • Advertising, publicity, & relations with other members • Remuneration • Use of titles • Little direction in “standards of practice”

7. History of Standards • 1970’s: “Standards” start to be developed in response to guides/laws issued by AICPA, NAIC, Federal Government, et al. • Late 70’s: Emergence of the “Valuation Actuary” • 1985: Interim Actuarial Standards Board (IASB) formed • 1988: ASB formed; given sole discretion to promulgate actuarial standards of practice • Charge: develop, promulgate standards; continually review them for update needs

8. Standards of Practice • Standards of professional performance and behavior • Developed to meet the expectations of users of the professional services • Provide guidance for: • Dealing with commonly encountered problems • Handling new problems & non-routine situations • Ensure the high quality of professional services

9. Role of ASB Actuarial Standards Board (ASB) responsible for promulgating ASOPs ASB has exclusive authority to determine ASOP needs and content All actuaries required to observe ASOPs

10. Purpose of ASOPs Provide actuaries with framework for performing actuarial assignments ASOPs are principles-based – do not dictate every step of a project ASOPs do not mandate a single approach, but rather provide guidance Emphasize process over outcome – actuaries can reasonably disagree

11. Practice Areas • Five “Areas of Practice” within ASB, each with its own operating sub-committee, charged with developing & reviewing appropriate ASOP’s: • Casualty • Health • Life • Pension • General

12. Format of Standards • Preamble • Purpose, scope, effective date of Standard • Definitions of special terms • Background & historical issues • Review of current & alternate practices • Analysis of Issues & Recommended Practices • Communications & Disclosures

13. Question #1 Which entity has discretion to promulgate actuarial standards of practice? A. CAS B. ASB C. AAA D. ABCD