Contribution Confirmation

[JBones]

An advisor that I work with has provided an email listing the date and amount of contributions for a client. He's not the investment advisor, but more of a business advisor. I asked him for either a signed confirmation from the client listing the dates and amounts, or a copy of the checks or bank statements. He is arguing that what he has provided should be good enough to certify the SB.

Is there something that I can point him to that states what documentation an actuary should require in order to certify an SB and AFTAP (it's a 1/31 year end so AFTAP isn't late yet)?

Thanks.

[Andy the Actuary]

You work for the client. Send your formal request directly to the client.

[Effen]

I agree with AtA, you have an obligation to the client, not the advisor.

That said, you're the actuary, it's your EA number on the line. You are the one who decides what you want to see as proof of deposit. Just tell him you won't sign it until you get the proof you need. If you don't get it, don't sign it.

[frizzyguy]

I understand the points made thus far but isn't the sponsor the one who inevitably gets in trouble if this information is fraudulent? If you can't get the client to confirm, they will have to see it eventually when they file the form. If an advisor sends me an email saying what they deposits are, we use them.

I do agree with Effen though, you're signing and it's your EA number but I have to imagine if the plan got audited and it turns out that those dates and numbers aren't correct that you wouldn't be the one in trouble. Just make sure you hold onto that email!

[JBones]

I have requested from the client, but they have always been very nonresponsive. I don't plan to sign a thing until the client provides the information. What I want is to be able to show the advisor that I'm not just being picky, but that there is in fact a standard to be followed, but it sounds from the conversation string that there is no specific standard. In any event, I've made it clear that I won't sign until the client provides the info.

[Andy the Actuary]

IMHO, you are in a precarious position. There are fines for late filing and the client may look to you to absorb these fines if you fail to sign.

To quote the wisdom of this Board's good friend Mike Preston, "Sometimes the "correct" course of action isn't the one that is legally defensible at a cost. Instead, it is the action that ensures one needn't defend anything - legally defensible or not."

You will likely have to wiggle around this issue gently. You may wish to send the client a letter listing the dates and amounts of contributions provided by the advisor, indicate that you attempted to verify but have been provided no basis to confirm them, but that if the Client does not advise that these are incorrect by mm/dd/yyyy, you will complete the Schedule SB using them.

However, your actions now do not lock you into how you should practice your business in the future.

[JBones]

IMHO, you are in a precarious position. There are fines for late filing and the client may look to you to absorb these fines if you fail to sign.

To quote the wisdom of this Board's good friend Mike Preston, "Sometimes the "correct" course of action isn't the one that is legally defensible at a cost. Instead, it is the action that ensures one needn't defend anything - legally defensible or not."

You will likely have to wiggle around this issue gently. You may wish to send the client a letter listing the dates and amounts of contributions provided by the advisor, indicate that you attempted to verify but have been provided no basis to confirm them, but that if the Client does not advise that these are incorrect by mm/dd/yyyy, you will complete the Schedule SB using them.

However, your actions now do not lock you into how you should practice your business in the future.

I'm curious how others approach this issue in their own practice. What do others require their clients to provide in order to certify and does it depend on who the client is, i.e. actuaries doing third party work for other adminstrators vs. working directly with the plan sponsor. Am I correct that the Joint Board or the Actuarial Standards Board do not have a standard for this?

[Andy the Actuary]

1. Do not work through others or have others work through you.

2. Request contributions, benefit payments, and expense from the Plan Sponsor as well as trust statements. Full reconciliation is then accomplished.

3. Fire clients such as the described.

4. This work code is covered under a.t.a's code of business conduct for maintaining

5. Hide in the ivory tower: Be the sole employee of self-employment so that you are not prevented by income needs from sticking to your convictions and professional standards.

Haven't read JBEA or ASB codes in awhile but believe they would recommend consideration of #3.