Procedures for ensuring that the data used by the loss reserve specialist is completed and accurate due to:
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A. B. C. D.C
The correct answer is C. Controls over the preparation of supporting data.
Loss reserve specialists rely on data to estimate the amount of loss reserves needed by an organization. To ensure the accuracy and completeness of this data, controls are necessary over the preparation of supporting data.
Supporting data includes information about the claims filed, the settlement amounts, the types of claims, and the historical trends in claims. The accuracy of this data is critical for the loss reserve specialist to make informed estimates about future claims.
Controls over the preparation of supporting data may include:
Data validation procedures: Data is checked to ensure it is accurate and complete. This may include comparing the data to external sources or conducting statistical analyses to identify outliers or inconsistencies.
Data integrity controls: Controls are put in place to ensure that data is not altered or deleted inappropriately. This may include limiting access to the data or using electronic signatures to track changes.
Data quality checks: Procedures are in place to ensure that the data is entered correctly and that errors are corrected in a timely manner.
Documentation requirements: Supporting data should be properly documented to ensure that it can be traced back to its source and that any assumptions made by the loss reserve specialist are clear.
By implementing controls over the preparation of supporting data, organizations can ensure that the loss reserve specialist has access to accurate and complete data, which in turn will lead to more accurate estimates of loss reserves.