IFoA Standards: APS X2
APS X2 is a set of guidelines which the IFoA brought into force on 1 July 2015, relating to the review of actuarial work.
In particular, it sets out the requirement of each member to apply professional judgement to determine whether a piece of actuarial work requires a work review, and whether such a review should be in the form of an independent peer review.
The guidelines set out a number of criteria for consideration when making this decision, such as the difficulty of the work, the extent to which judgement has been applied, and the financial significance of the consequences of the piece of work.
Crucially, members should be able to justify the approach adopted for reviewing work.
What is the APS X2 post-implementation review?
Since the guidelines were brought into force, the IFoA has undertaken a review of APS X2 to assess how effectively the guidelines are achieving their objectives. Although the review found that APS X2 has been broadly well-received among the actuaries consulted, the review identified several areas in which members could benefit from additional guidance. To this end, the IFoA has released a set of additional materials which are aimed at improving members’ understanding on the practical implementation of APS X2.
The new materials are intended to focus on a number of key areas.
Where actuarial work is completed with reference to a template, these templates should be subject to regular review to ensure that the template remains appropriate and is operating as required.
2. Team structures
The potential needs for work reviews should be taken into consideration when structuring multi-disciplinary teams, in order that junior actuaries have sufficient access to appropriate persons who may carry out reviews.
3. Professional judgement
Several pieces of the new material highlight the importance of members applying their own professional judgement to come to a decision as to whether a work review is required, even if the member’s employer disagrees.
For a work review to be effective, it must be able to have an impact on the finished work product – so-called “cold file” retrospective reviews do not suffice.
5. Review of internal implementation
In order to ensure that implementation remains in line with an organisation’s policies, it is advised to conduct regular reviews.
More details of the post-implementation review and the materials can be found on the IFoA website here.
What is APR doing to comply with the guidance?
We recognise that the various actuarial professional standards, such as APS X2, play an important role in ensuring the high quality of the work that we provide to our clients, both on resourcing and consulting projects. To ensure that these standards are adequately allowed for in our work, we take the following steps:
As a company, we regularly review the latest guidance available and use this to refresh our internal procedures where necessary.
All APR actuarial staff are introduced to the applicable professional standards as part of our intensive induction training programme. Additionally, we have an area within our intranet platform dedicated to professional standards, where all staff can raise questions and discuss with their peers. We also provide summaries of the key information within each standard which we request all staff to re-read and confirm their understanding of their obligations at least annually.
Most of our clients will have their own processes in place regarding confirmation of compliance with professional standards, and we encourage our staff on resourcing projects to follow these where appropriate. For consulting projects, we provide our staff with strong guidance around regular consideration of professional standards requirements as we progress through different stages of the project. This aims to ensure that the standards are a conscious part of the completion of the work rather than a box-ticking exercise done at the end. As part of this, we will discuss with clients at an early stage to fully understand the use and purpose of the work being carried out to ensure that the appropriate standards are being applied.
In particular, for APS X2, our approach references the IFoA’s latest post-implementation review guidance detailed above. While this information does not dramatically alter the approach taken, we believe that the additional information provides further clarity and highlights some useful points to consider when determining the need for peer review of actuarial work.
APS X2 is a set of IFoA guidelines on when and how actuaries should seek peer review of actuarial work. The IFoA’s post-implementation review, while not materially changing the standard, has provided further material and guidance on how to implement the standard effectively.
At APR we feel that such standards play an important part in maintaining the quality of our work and should be well embedded within all our actuaries’ thinking. Our approach is designed to encourage our staff to exercise professional judgement in all areas of their work, and to enable open and constructive discussion about the requirements between staff at all levels of experience. The intention is that this approach helps to facilitate an appropriate and thoughtful implementation of the guidelines, in line with what we believe the standards are trying to achieve.