understanding actuarial management part vi

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2、-profilecorporatefailuresoccurredafterreportedprofitswereinflatedbyundetectederrors,whetherornotfraudorotherdeliberateinterventionwasinvolved.Finally,reportedprofitisaffectedbytimingissues.includingthequestionofwhichaccountingperiodaparticularitemofincomeorexpensebelongsto

3、.Foractuaries,themostsignificanttimingissuesgenerallyrelatctodelaysinthereportingofclaims.Assuch.anallowanceshouldbemadeforincurredbutnotreported(IBNR)claimstoreflectthetrueexperienceinaparticularperiod.16.4ProfitversusvalueRunningacrosstheemergenceofprofitissuediscussedab

4、ove,thereisageneralissuethatgoesbeyondthedifferenceintheuseofpricingorliabilityassumptionsand/orpricingorliabilityprofit/riskmargindetermination.Thisrelatestoafundamentalprofitrecognitionissue.Itisthedifferencebetween:eaJ'/ledprofit-forexample,bookingtheprofitmarginwithina

5、ninsurancepremiumastherisksundertheinsuranceproductpassandthepremiumisearned:andeconomicvalueaccrued-forexample,bookingthevalueofthedifferencebetweenthefuturepremiumstobereceivedandthefuturebenefitsandexpenses,createdonthedaythebusinessiswritten.Thesealternativeviewsofprof

6、itarereflectedinthecurrentlycompetingaccountingframeworksof:deferral-and-matching-underthisframework,thefocusisondeterminingameaningfulmeasureofprofit.TheassetsandliabilitiesonthebalancesheetaremeasuredinawaythataimstoachieveamatchinthetimingofIherecognitionofincomeandexpe

7、nditure;andasset-alld-liability-underthisframework,thefocusisondeterminingameaningfulbalancesheet.Profitisthenthechangeinthevalueofthebalancesheet'snetassetposition7overtime.Proponentsofthedeferral-and-matchingmodelareconcernedwithtryingtodistillameasureoftheunderlyingprof

8、itabilityofabusinessprocess.Profitreportingbasedonliabilitiessetonthepricingassumptionswo