SOFA-CFE Exam Questions

What is represented between a 20 percent and 50 percent interest generally are reported using the equity method of accounting?

A derivative is a financial instrument or other contract with which key characteristic?

Which of the following is NOT the permitted hedge relationships identified by FASB?

Under the hedge of a net investment in a foreign operations model, the _____________ is recorded on the balance sheet at fair value with changes in fair value as a component of oth...

To determine whether a contract has an embedded derivative which criteria must be met?

If the referenced investment portfolio return is positive, the ceding company owes the return to the ceding company.

If the return on the investments is negative, _______________ owes the ceding company an amount equal to the negative return.

Property-casualty insurance companies have essentially which of the following expense categories:

Under GAAP, costs that vary with and are primarily related to the acquisition and issuance of insurance policies are known as:

Which of the following is the condition, which must be met, for a contract to indemnify the ceding company against loss or liability relating to insurance risk?

Premiums for which contracts are to be reported as prepaid reinsurance premiums and expensed over the remaining period of the reinsurance contract or over the terms of the policies...

Where it is not possible to reasonably estimate the amounts and timing of recoveries, the ____________is to be amortized using the recovery method.

What is a function of the actual recoveries to the total estimated recoveries?

For which contracts, increasing the liabilities typically would be the most appropriate method when recognizing the charge to current income.

Changes in the deposit asset (liability), other than the unexpired portion of the coverage provided, are recorded as an accounting against the reimbursable loss.

Adjustments to the deposit related to the unexpired portion of the coverage are recorded as an adjustment to incurred losses.

Under SAP, reserves for losses and loss adjustment expenses and unearned premiums ceded to reinsurers are reported as annual disable losses of the related reserves.

GAAP requires that all declared policyholder dividends be accrued at the balance sheet date, using actual amount to be paid.

Under SAP, contingent commissions are accrued over the same period in which the related underwriting results are recognized.

SAP, an insurance company is given an option of recognizing salvage and subrogation upon receipt or accruing the estimated amount of salvage and subrogation related to ultimate cla...

What includes a requirement that 20 percent of the change in net unearned premium reserves be included in payable income?

Tax law includes a provision that 50 percent of the tax-exempt interest income and the dividends- received deduction are exempt from taxation.

What of a particular period is principally determined based on benefits earned by participants during the period (service costs) less earnings on plan assets in excess of interest...

In SAP, reserves for losses and loss adjustment expenses and unearned premiums ceded to reinsurers are reported as reductions of the related reserves.

In GAAP, reserves for losses and loss adjustment expenses and unearned premiums ceded to reinsurers are reported as:

In GAAP, pension and postretirement benefit obligation calculation includes vested participants and active participants not currently eligible.

In SAP, Surplus notes are reported as:

Federal and state taxes, Relationships with external auditors, Treasury and investment functions are all responsibilities of:

A system of ______________, in the broad sense, includes controls, which may be characterized as either accounting or administrative.

What include, but are not limited to the plan of organization and the procedures and records that are concerned with the decision processes leading to management's authorization of...

Accounting controls are designed to provide reasonable assurance that:

The basic tasks of a system generally include the recognition of an economic event as a transaction, followed by approval, computation, posting, summarization, accumulation and rep...

What are the techniques employed to prevent and detect errors in processing transactions, to safeguard assets and to ensure the reliability of financial records.

What foster a strong ethical climate and open channels of communication to help protect against irregularities and fraudulent financial reporting?

What needs to understand and assess this environment and the system of internal controls so it can exercise effective oversight?

Financial reporting is the most critical component of the full and fair disclosures that ensure the effective functioning of the capital and credit markets in the United States, it...

The internal audit function typically focuses on:

Who are principally responsible for communicating to the Audit Committee the scope of their annual audit of the financial statements, the extent of their involvement with interim r...

What focused on the corporate responsibility for the appropriateness of the financial statements and related disclosures for public companies?

Control Environment, Risk Assessment, Control Activities, Information and Communication and Monitoring are all components of:

Under statutory accounting principles, __________________costs are non-admitted assets and are charged directly to earnings, as their respective expense components are incurred.

A powerful tool for controlling economic events, called _________________ encompasses the development of a long-range or strategic plan, the analysis of capital expenditures, the p...

What is a refinement of the insurance company's definition of its overall objective and business and includes the company's vision, mission and objective?

What must integrate various operating programs and project the funds required to support the programs and evaluate whether the insurance company realistically can generate the need...

A process of improving performance by continuously identifying, understanding and adopting outstanding practices and processes found inside and outside the organization is called:

Which phase subjects a capital expenditure proposal to review by all departments capable of passing judgment on the procedural aspects?

A ____________ allocation resembles a straight-line method for spreading the cost over the period of benefit.

Variable and semi-variable methods include an allocation based upon a usage or production basis.

What should define and communicate the goals and directions of the insurance company's economic activity during the current and following one or two fiscal years?

_____________ is an attempt to allocate the excess of an insurance company to segments of a company's business.