The actuary assists the social security scheme in complying with the relevant accounting standards. The actuary uses the relevant methodology and assumptions when carrying out calculations to be used for accounting purposes.
Guideline code
ACT_04300
Mechanism
Mechanism
- Unless otherwise prescribed by the applicable accounting standard, for schemes financed using PAYG or a partial funding approach, the calculations of liabilities and assets should take into account future contributions as well as future benefits of current and future contributors. When prescribed accounting methods require an actuarial methodology that does not reflect the financing approach of the scheme, a separate disclosure of the results using the methodology consistent with the scheme’s financing approach is recommended in addition to the results based on the prescribed method under accounting standards.
- An actuary should set out the details of the methodology and assumptions in the actuarial valuation report for accounting purposes and provide additional results where appropriate to ensure full knowledge is provided for policy-makers to obtain a fair and complete picture of the financial status of the scheme.
- It is recommended that the actuary presents sensitivity analysis results that illustrate how the required disclosed information is impacted by the use of alternative assumptions. Guideline 8 provides more details on illustrating uncertainty of results.
- The actuary should liaise appropriately with the scheme accountants and auditors in respect of the purposes and methodologies of accrual accounting, financial accounting, deficit calculations and other relevant accounting issues. These methods must be defined and explained in the actuarial valuation report for accounting purposes. The financial statements and other relevant figures should be consistent with the corresponding accounting standards.
- The report on the actuarial valuation for accounting purposes should specify compliance with relevant actuarial and accounting standards.
- The actuary should coordinate as appropriate with other stakeholders involved in the process with a view to ensure that the communication of results takes into account the financing approach of the scheme.
Structure
Principles
- Social security institutions complying with national and/or international accounting standards should seek the input of the actuary to provide relevant input into the disclosures.
- The actuary should be aware of the relevant accounting principles, national statutory requirements and applicable guidance to be taken into account in performing his or her work.
- Accounting standards refer to technical documents and may change over time. The actuary should ensure that he or she understands the actuarial implications of the relevant standard and discloses them as appropriate.
- National actuarial standards usually provide guidance to actuaries and other professionals on compliance with accounting standards.
- Unless otherwise prescribed by applicable accounting standards, the methodology used in the actuarial valuation for accounting purposes should be consistent with the financing approach adopted for the social security scheme.
- When the methodology prescribed by accounting standards is not consistent with the financing approach of the social security scheme, the social security institution should encourage the relevant national authorities to disclose calculations consistent with the financing approach of the social security scheme, together with explanations on the different purposes of different sets of results and a discussion on long-term sustainability.
- An actuary is responsible for applying and respecting appropriate standards of practice in his or her work.
Title HTML
Guideline 37. Compliance with accounting standards
Type
Guideline_1
Weight
46