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Code of Code of Professional Professional
ConductConduct
Darrell KnappDarrell Knapp
Kansas City Actuaries Club SeminarKansas City Actuaries Club Seminar
June 24, 2009June 24, 2009
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AgendaAgenda
Overview and backgroundOverview and background Review Code of Professional Review Code of Professional
ConductConduct Case StudyCase Study
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Why a Code of Conduct?Why a Code of Conduct?
Characteristics of a ProfessionCharacteristics of a Profession Specialized knowledge or serviceSpecialized knowledge or service Confidential relationship with Confidential relationship with
employer/clientemployer/client Public obligation (altruistic)Public obligation (altruistic) Autonomy/clients incapable of Autonomy/clients incapable of
appraising serviceappraising service Official recognitionOfficial recognition Ethical code/code of conductEthical code/code of conduct
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Applying Code Applying Code Without Knowing ItWithout Knowing It
Do you--Do you-- Consider whether you are qualified to do an Consider whether you are qualified to do an
assignment?assignment? Follow Actuarial Standards of Practice?Follow Actuarial Standards of Practice? Identify yourself in actuarial communications?Identify yourself in actuarial communications? Identify clients when there may be a conflict of Identify clients when there may be a conflict of
interest?interest? Put limitations on the distribution of your Put limitations on the distribution of your
work?work? Protect confidentiality of information?Protect confidentiality of information?
The Code of The Code of Professional Professional Conduct: An Conduct: An
OverviewOverview The revised Code took effect January 1, The revised Code took effect January 1,
20012001 Sets forth professional/ethical standards Sets forth professional/ethical standards
for Academy membersfor Academy members Adopted by the AAA, SOA, ASPPA, CAS, Adopted by the AAA, SOA, ASPPA, CAS,
and the CCAand the CCA Actuaries who commit material violations Actuaries who commit material violations
are subject to counseling/disciplinary are subject to counseling/disciplinary processprocess
An OverviewAn Overview(continued)(continued)
Actuaries must remain current with the Code Actuaries must remain current with the Code and comply with its provisions; violations and comply with its provisions; violations subject to counseling and discipline subject to counseling and discipline proceduresprocedures
Precepts are standards; annotations assist with Precepts are standards; annotations assist with interpretation/applicationinterpretation/application
Follow applicable standards wherever you Follow applicable standards wherever you practicepractice
Also subject to jurisdictional codes or Also subject to jurisdictional codes or standardsstandards
When Code and law conflict, follow the lawWhen Code and law conflict, follow the law Definitions are providedDefinitions are provided
Professional IntegrityProfessional Integrity
Precept 1Precept 1 Act honestly, with integrity and Act honestly, with integrity and
competence, and in a manner that fulfills competence, and in a manner that fulfills the profession’s responsibility to the the profession’s responsibility to the public and upholds its reputationpublic and upholds its reputation Perform professional services with skill and Perform professional services with skill and
carecare Refuse to provide professional services that Refuse to provide professional services that
would violate or evade the law, or damage would violate or evade the law, or damage the profession’s reputationthe profession’s reputation
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Professional IntegrityProfessional Integrity
Precept 1 Annotations ContinuedPrecept 1 Annotations Continued Do not use relationship with one party Do not use relationship with one party
to obtain illegal or improper treatment to obtain illegal or improper treatment for another partyfor another party
Do not engage in professional conduct Do not engage in professional conduct that involves dishonesty, fraud, deceit, that involves dishonesty, fraud, deceit, deception, or misrepresentation, or deception, or misrepresentation, or act in a way that will reflect adversely act in a way that will reflect adversely on the actuarial professionon the actuarial profession
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Qualification StandardsQualification Standards
Precept 2Precept 2 Perform professional services only when Perform professional services only when
qualified to do so AND in compliance qualified to do so AND in compliance with Qualification Standardswith Qualification Standards Know and follow applicable Qualification Know and follow applicable Qualification
Standards for appropriate jurisdiction; in Standards for appropriate jurisdiction; in U.S., published by the Academy.U.S., published by the Academy.
The absence of a Qualification Standard The absence of a Qualification Standard does not relieve you of the duty to comply.does not relieve you of the duty to comply.
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Standards of PracticeStandards of Practice
Precept 3Precept 3 Make sure that work performed by Make sure that work performed by
you, or under your direction, meets you, or under your direction, meets applicable standards of practiceapplicable standards of practice Know and follow applicable standards for Know and follow applicable standards for
the jurisdiction; in the U.S., ASOPs of the the jurisdiction; in the U.S., ASOPs of the ASBASB
When applying standards, use When applying standards, use professional judgmentprofessional judgment
Be prepared to disclose and justify Be prepared to disclose and justify deviationsdeviations
Communications and Communications and DisclosureDisclosure
Precept 4Precept 4 Take appropriate steps to ensure Take appropriate steps to ensure
that communications are clear, that communications are clear, appropriate to the circumstances appropriate to the circumstances and intended audience, and and intended audience, and comply with applicable ASOPscomply with applicable ASOPs Identify yourself as person Identify yourself as person
responsible for your communicationsresponsible for your communications Indicate your availability to provide Indicate your availability to provide
supplemental informationsupplemental information
Communications and Communications and DisclosureDisclosure
Precept 5Precept 5 As appropriate, identify your As appropriate, identify your
principal(s) and the capacity in principal(s) and the capacity in which you servewhich you serve
Communications andCommunications andDisclosureDisclosure
Precept 6Precept 6 Make timely disclosure to Principal Make timely disclosure to Principal
of all known direct and indirect of all known direct and indirect sources of compensation related to sources of compensation related to the assignmentthe assignment Disclose any relationships that are Disclose any relationships that are
pertinent but may not be apparentpertinent but may not be apparent This applies to all such compensation, This applies to all such compensation,
wherever received within your firmwherever received within your firm
Conflict of InterestConflict of Interest
Precept 7Precept 7 Do not knowingly provide professional Do not knowingly provide professional
services involving a real or potential services involving a real or potential conflict of interest unless:conflict of interest unless: Your ability to act fairly is unimpaired,Your ability to act fairly is unimpaired, There has been disclosure of the conflict There has been disclosure of the conflict
to all known affected Principals, andto all known affected Principals, and Such Principals have expressly agreed to Such Principals have expressly agreed to
your performing the professional servicesyour performing the professional services
Control of Work Control of Work Product Product Precept 8Precept 8
Take reasonable steps to ensure Take reasonable steps to ensure that your services will not be used that your services will not be used to mislead other partiesto mislead other parties Recognize the risk of misuseRecognize the risk of misuse Present your work clearly and fairlyPresent your work clearly and fairly Set appropriate limits on the use and Set appropriate limits on the use and
distribution of your workdistribution of your work
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ConfidentialityConfidentiality
Precept 9Precept 9 Do not disclose confidential Do not disclose confidential
information unless authorized by information unless authorized by the Principal, or required by law, the Principal, or required by law, to do soto do so
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Courtesy and CooperationCourtesy and Cooperation
Precept 10Precept 10 Perform services with courtesy and Perform services with courtesy and
professional respect and cooperate professional respect and cooperate with others in the Principal’s interestwith others in the Principal’s interest Discuss differences of opinion Discuss differences of opinion
objectively and with courtesy and objectively and with courtesy and respectrespect
You may agree to represent, in the same You may agree to represent, in the same matter, another actuary’s current or matter, another actuary’s current or former Principalformer Principal
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Courtesy and CooperationCourtesy and Cooperation
Precept 10 Annotations ContinuedPrecept 10 Annotations Continued You may issue an alternative opinion to one You may issue an alternative opinion to one
issued for a Principal by another actuary issued for a Principal by another actuary but include supportbut include support
You may wish to consult with a prior You may wish to consult with a prior actuary; get the Principal’s consent firstactuary; get the Principal’s consent first
Cooperate with an actuary who takes over a Cooperate with an actuary who takes over a Principal’s account, unless you have a pre-Principal’s account, unless you have a pre-existing agreement with the Principal to the existing agreement with the Principal to the contrary; financial issues not a valid reasoncontrary; financial issues not a valid reason
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AdvertisingAdvertising
Precept 11Precept 11 Do not engage in advertising or Do not engage in advertising or
business solicitation that is false or business solicitation that is false or misleading in any mediummisleading in any medium Includes any communication that may Includes any communication that may
directly/indirectly influence person’s or directly/indirectly influence person’s or organization’s decision whether, and organization’s decision whether, and from whom, to obtain actuarial from whom, to obtain actuarial services services
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Titles and DesignationsTitles and Designations
Precept 12Precept 12 Use membership titles and Use membership titles and
designations only as authorized by designations only as authorized by your organizationsyour organizations A “title” is a position (e.g., Committee A “title” is a position (e.g., Committee
Chairperson)Chairperson) A “designation” is a class of A “designation” is a class of
membership (e.g., ASA, FSA, or MAAA)membership (e.g., ASA, FSA, or MAAA)
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Violations of the CodeViolations of the Code
Precept 13Precept 13 Actuary who knows of apparent, Actuary who knows of apparent,
unresolved, material breach by another unresolved, material breach by another actuary should consider discussing actuary should consider discussing matter to obtain a resolutionmatter to obtain a resolution
If discussion not attempted or not If discussion not attempted or not successful, report it to ABCD, unless successful, report it to ABCD, unless prohibited by law or confidential prohibited by law or confidential information would be divulgedinformation would be divulged
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Violations of the CodeViolations of the Code
Precept 13 AnnotationsPrecept 13 Annotations Material violations are those that Material violations are those that
are important or affect an outcome; are important or affect an outcome; trivial infractions, or those merely trivial infractions, or those merely of form, are not materialof form, are not material
Not needed to be discussed if Not needed to be discussed if prohibited by law or is acting in an prohibited by law or is acting in an adversarial environmentadversarial environment
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Violations of the CodeViolations of the Code
Precept 14Precept 14 Respond promptly, truthfully, and fully Respond promptly, truthfully, and fully
in writing to ABCD’s request for in writing to ABCD’s request for informationinformation
Cooperate fully with ABCD Cooperate fully with ABCD investigation, subject to applicable investigation, subject to applicable restrictions on confidential restrictions on confidential information, or those otherwise information, or those otherwise imposed by lawimposed by law
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Case StudyCase Study