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The estimated liability includes the amount of money that will be used for future payments of:
Scope of Examination and Report of Independent Certified Public Accountant states that:
The maximum error in the population that the auditor is willing to accept is called:
A company that has its loans serviced, for whatever reason, is usually charged a servicer’s fee. This fee is usually expressed:
The nature and extent of interest rate risk, credit risk, reinsurance risk and other significant risks should be disclosed is required for:
______ is used when the rates for large or usual risks are established almost entirely by the skill and experience of the rate maker.
The sum of values assigned by claims adjusters to specific known claims that were recorded by the insurance entity but not yet paid at the financial statement date is called:
A liability for premiums paid in advance can also arise when insurers allow policyholders to pay several years’ premiums at one time. Since the insurer has the use of policyholder funds that are not yet due, it is customary for the insurer to:
Prepayment of a conventional mortgage loan, prior to its specified maturity, is discouraged through the general market acceptance of significant prepayment penalties. Often these penalties are calculated so that when prevailing market interest rates are:
In determining whether an operation is self-sustaining or integrated, what you do not need to consider is:
Liabilities are recognized for known claims when sufficient information has been developed to indicate the involvement of a specific insurance policy.
The Appointed Actuary has a responsibility to express an opinion on the appropriateness of certain actuarially determined amounts in the financial statements.
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?
Which of the following is NOT the way to make changes in variables that can be considered in the loss reserving process?
When premium income less return premiums arising from policies issued or other contracts entered into reinsure other insurance entities that provide the related primary coverage are called:
Financial Statements provide additional valuable information on the loans. Some of the more significant information provided includes EXCEPT:
An entity’s practices concerning loss settlement, such as a practice of vigorously defending suits or of quickly settling suits, can have a significant effect on an entity’s loss experience.
Insurance agents act as contractors in groups who express one or more entity with express authority to act for the entity in dealing with insureds.
In case of supplementary contracts, the amount of each payment is computed on the basis of the assumed (or guaranteed) interest rate and the number and frequency of payments selected. For example:
The auditor responds to risks of material misstatements due to fraud in which of the following ways?
Which of the following is NOT the interrelated component of internal control?
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?
A change in _______ or its application is appropriate if the change results in a measurement that is equally or more representative of fair value in the circumstances.
The magnitude of the variable annuity benefits provided by a deferred annuity depends on the size of the account value at the end of the accumulation phase.
What are especially effective in investment strategy, because of the powerful risk management attributes they provide?
The profitability of an insurance entity on a statutory basis is generally gauged by:
The arrangements by which pools manage separate accounts for each pool member from which the losses of that member are paid is called:
What represent the ownership interests in the net assets of the subsidiary held by persons outside the controlling entities’ structure?
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.
Generally, residential loans are open to prepayment at any time without penalty. To protect against a deficiency, mortgage loans should not exceed the market value of the mortgaged property and in fact are usually made for:
What is the act in which the main sections are for Canadian companies and for foreign companies?
Which are the types of misstatements relevant to the auditor’s consideration of fraud in a financial statement audit?
Extrapolation of historical dollars, projection of separate frequency data, use of expected loss ratios are all projection methods for:
Investments in equities by a life insurance company may not exceed the total of
The loss reserve estimate is a significant estimate in the financial statements of an uninsured entity.
The name of each Subsidiary, Controlled and Affiliated (SCA) entity and percentage of ownership of common stock must be put to disclosure when:
Which of the following is NOT the category of Life and health insurers in Canada?
What limits the repurchase price to a stipulated percentage of the face amount of the certificate?
The estimated amount receivable from third parties from whom the insured may have the right to recover damages is known as:
Direct serving loans method requires a system of good internal control and requires that the functions be split between the Accounting Department and the Investment Department. In such a case the Accounting Department is responsible for all of the following EXCEPT:
________________ is an agreement between two counterparties to enter into a particular transaction at a specified date in the future at an agreed-upon price.
When no tax deductions are allowed if risks are not transferred, whereas premiums paid to insurers are tax deducible, this leads to the formation of:
Sales of securities are recorded as of the trade date. A receivable due from the broker is established in instances when a security has been sold, but the proceeds from the sale have not been received. Receivable for securities not received within settlement date are non-admitted, and are classified as other than invested assets.
When dividends are left to accumulate at interest, the insurer typically sends a notice to each policyholder showing the amount accumulated at the end of the policy year. The notice also shows the dividend credited and interest earned for that policy year. The dividend left at interest may later be received by or credited to the policyholder in several ways. Which of the following is/are out of those ways?
Lines of insurance in which claims are settled relatively quickly are called:
The value of the capital stock shown in the stock life insurance company’s statutory basis balance sheet equals the par value per share multiplied by the number of issued shares. In the case of no-par stock:
Generally, Participation income is an income stream due the company and is based upon the financial results of the borrower and/or borrowing business entity. Although it can take several forms, the more prominent ones are:
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:
In what, securities involve in repos are not delivered on the settlement date of the agreement and the contract may be extended upon mutual agreement of the buyer-lender and seller-borrower.
According to Securities and Exchange Commission (SEC), “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise” is called:
The organizations in which the ownership and control of operations are vested in the policyholders are known as:
The amount that currently would be required to replace the service capacity of an asset is called:
An increase in loss reserves may lead to offset by a reduction in premiums and a decrease in loss reserves may be a receivable for additional premiums.
Insurance entities usually write covered-call options because they consider the premium received for writing the options to be either:
An attitude that includes a questioning mind and a critical assessment of audit evidence is called:
What allows an entity to eliminate the reserve that was recorded for the claim, even if it exceeded the amount paid for the settlement?
Duration is a measure of the first-order interest rate sensitivity of a financial instrument.
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:
The potential for loss resulting from changes in market interest rates are known as:
Accounting transactions that occur after the initial investment in a loan and during the period the loan is being serviced fall into two broad categories. Which one of the following is out of those categories?
Which of the following is NOT the date that is the key to classify the chronology of the data?
SAP stresses measurement of emerging earnings of a business from period to period while GAAP stresses measurement of the ability to pay claims in the future.
Which of the following is NOT included when initial acquisition of Subsidiary, Controlled and Affiliated Entities (SCA) is recorded as the sum of?
Which risk assessment procedures are used to obtain an understanding of the entity and its environment, including its internal control?
Who is responsible for accounting for customer remittance advices and the agent’s current account?
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date is called:
To avoid double counting or omitting the effects of risks factors what should reflect assumptions that are consistent with those inherent in the cash flows?
The balloon payment technique uses level payments of principal and interest but for a shorter period than is required to retire the loan fully during its term. For example, a loan with a 8.5 percent interest rate utilizing a 25-year amortization schedule with a 7-year maturity results in only $111 of each $l,000 principal being repaid. Thus, $889 of each $l,000 originally borrowed constitutes the balloon amount due at maturity.
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:
TESTED 12 Sep 2025