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Professionalism Counts is a column in Actuarial Update, the Academy's monthly newsletter. 

July 2020



The first precept of our Code of Professional Conduct requires us to act with integrity, honesty, and competence. The remaining precepts elaborate on this basic requirement in other areas, including standards of practice and communication. Precept 3 requires us to ensure that the work we do (and oversee) meets the requirements of applicable actuarial standards of practice (ASOPs). 

Precept 4 lays out the expectations for actuarial communications: They should be clear and appropriate to the circumstances and intended users, and satisfy applicable standards of practice.


Satisfying the requirements of Precepts 3 and 4, then, means that we must pay close attention to the ASOPs, including the disclosures required in section 4 of every ASOP.


Why such a stress on disclosures? Clear and appropriately detailed disclosures not only demonstrate our integrity, but allow intended users of an actuarial work product to better understand the findings presented and judge how reliable they are. There is always an element of uncertainty in actuarial work, and in today’s environment, that element of uncertainty is perhaps greater than it has been in most of our careers, perhaps our lifetimes. Intended users of an actuarial report are relying on our reports to make decisions that affect people’s financial well-being, so it is important that those decision makers understand the report, including how uncertain that information may be.


ASOP No. 41, Actuarial Communications, which applies to all practice areas, sets requirements for actuarial communications.


First, in any actuarial communication you must identify the actuary responsible for the communication and the documents themselves.(1) Second, if you expect the user to rely on your findings, you should issue an actuarial report. In that report, you should state the actuarial findings and identify the methods, procedures, assumptions, and data you used with sufficient clarity that another actuary qualified in the same practice area could make an objective appraisal of the reasonableness of your work as presented in the actuarial report.(2)


You should also disclose the intended user, the scope and intended purpose of the assignment, an acknowledgment of qualifications, any cautions about risk and uncertainty, any limitations and constraints on the use or applicability of the findings, any conflict of interest, any reliance on other sources for data or other information, the information date, any subsequent events, and, if appropriate, the documents comprising the actuarial report.(3)


Assumptions and methods are so important that two disclosure sections of ASOP No. 41 are devoted to them: section 4.2, Certain Assumptions or Methods Prescribed by Law; and section 4.3, Responsibility for Assumptions and Methods.


When you use any material assumption or method prescribed by law, you should disclose the law under which the report was prepared, the assumptions or methods prescribed by that law, and that the report was prepared in accordance with that law.


When assumptions and methods are not prescribed by law, you are presumed to take responsibility unless otherwise stated in the report. If you state reliance on other sources, thereby disclaiming responsibility for any assumption or method, you should disclose the assumption or method that was set by another party, who set the assumption or method, and why that party set the assumption or method. You should also disclose if you believe the assumption or method significantly conflicts with what would be reasonable for the purpose of the assignment or you were unable to judge the reasonableness of the assumption or method.


Remember, the disclosures required by ASOP No. 41 are a minimum. Each ASOP that applies to a specific task or assignment requires other disclosures specific to that task or assignment. As ASOP No. 23, Data Quality, also applies to every actuarial task, it’s a good idea to become as familiar with the disclosures required by that ASOP as you are with those required by ASOP No. 41.


In these uncertain times, the public is relying more than ever on the security of the financial systems that our work contributes to. Disclosures help the intended users make better decisions about their own needs, and thus help us fulfill our responsibility to the public.



1 Sections 4.1.1 and 4.1.2

2 Section 3.2

3 Section 4.1.3


Professionalism Counts

Q&A: Self-Regulation and the Actuarial Profession 

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