AFE Practice Exam Questions with Answers Accredited Financial Examiner Certification

What represent the ownership interests in the net assets of the subsidiary held by persons outside the controlling entities’ structure?

The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as:

What features a reserve that accumulates at company declared credited interest rates, which are periodically reset?

In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:

Insurance entities usually write covered-call options because they consider the premium received for writing the options to be either:

Which of the following is NOT the way to make changes in variables that can be considered in the loss reserving process?

In processing ______________, many entities keep a single file for each insured event, with separate identification of each claimant.

What limits the repurchase price to a stipulated percentage of the face amount of the certificate?

The two basic methods for billing premiums are:

The establishment of loss reserves generally requires considerable judgment and knowledge of the entity’s business is known as:

Which of the following may NOT involve a high degree of management judgment and subjectivity and may present risks of material misstatement due to fraud?

These are the loans in which:

Arrangement is usually called commitment When the structure is completed and put in service, the loan is paid off from the proceeds of the long term financing, whatever its source Proper controls would require the lender to obtain documentation for the disbursed portion of the construction loan and be assured that the cost of the structure to date is equivalent to the disbursed portion of the construction loan. What are these?

There are many different sources of CMBS. Conduits and aggregate pools generally consist of loans newly originated, purchased or held by investment bankers until the pool is large enough for an efficient execution. Government agencies such as the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corp. (FHLMC) are important sources of:

Which are the types of misstatements relevant to the auditor’s consideration of fraud in a financial statement audit?

A process designed to provide reasonable assurance about the achievement of the entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations is called:

The contracts that are not subject to unilateral changes in its provision and requires the performance of various functions and services for an extended period is called:

Claims adjusting involve:

_______________ reserves for income tax purposes are referred to as maximum tax actuarial reserves (MTAR) and replace the actuarial liabilities used for accounting purposes in computing taxable income.

Experience refund provisions of group insurance contracts are most often concerned with the manner of distributing any profits between the insurer and the insured group. The agreements usually contain provisions specifying how losses will affect the profit allocations for the insured group. In such situation:

Which risk assessment procedures are used to obtain an understanding of the entity and its environment, including its internal control?

Principal objectives of state statutes are: to investigate and settle some or all of the

Generally, a company earns a servicing fee when it retains the servicing of a block of loans in which it has sold all or part of the block. Service fees received from sales of participations are recorded as:

The combined ratio is the sum of it:

________________ is an agreement between two counterparties to enter into a particular transaction at a specified date in the future at an agreed-upon price.

Spreading of risks among insurance entities is called:

Structured settlements are agreements characterized by the periodic payment of fixed amounts to a claimant in connection with the settlement of a legal claim. Such payments may last for the lifetime of the payee or they may be for a particular period of time, depending upon the terms of the settlement. The party responsible for making structured settlement payments may make payments:

Accounting for escrow funds is difficult because of the large number of transactions related to such funds. A separate bank account or a trust bank account may be opened, with all escrow receipts deposited into it to prevent:

What usually features a fixed premium that acts to levelize the policyholder’s outlay over the lifetime of the policy?

Immunization theory says that:

The reason behind, when an insurance entity may request permission from the domiciliary state regulatory authority to use a specific accounting practice in the preparation of its statutory financial statements, may include:

Insurers issuing participating policies sometimes incur dividends which have been earned but which have not been disbursed or otherwise credited as of the financial statement date. Such dividends represent a due and unpaid liability amount. Reasons why dividends may be due and unpaid include all of the following EXCEPT:

Reduction for salvage is:

Revenue risk is defined as:

What allows an entity to eliminate the reserve that was recorded for the claim, even if it exceeded the amount paid for the settlement?

is provided by original documents is more reliable than audit evidence provided by photocopies or facsimiles.

Adjusting and Others (AO) reserves are often provided for by using the calendar year paid-to-paid method rather than the accident year paid-to-paid method used for Inflation in Defense & Cost Containment (DCC) reserves.

Which of the following is NOT the kind of public entity risk pools?