LOMA 291 Module 4 Questions with 100%
Correct Answers
At a typical insurance company, which of the following areas are part of financial
operations? Choose all that apply.
a. Accounting and financial reporting
b. Treasury operations
c. Information technology
d. Investment operations
e. Internal audit
A, B, D, & E- All of these areas—except for information technology—are part of a typical
insurance company's financial operations. Although the IT department plays an essential role
in maintaining the quality of the data provided to financial managers, it is not technically part
of financial operations.
Board and Executive Roles
The financial management function
Provides information to stakeholders
Ensures that financial obligations are met
Ensures compliance with complex financial regulations
Generates adequate returns for the company's owners and customers
Role of the Board of Directors
- Investment committee: The investment committee sets Forthright's investment policy and
oversees investment operations.
,- Audit/risk committee: The audit/risk committee directs Forthright's audit and internal
control function.
The role of the Ceo
I approve our budget numbers. Then I manage our resources—in line with budget guidelines
and all current laws and regulations.
Technically I'm responsible for directing financial objectives and strategies, but I delegate
most of these responsibilities to senior financial officers.
However, make no mistake, the buck stops here! We are a publicly held company. Investors,
customers, and regulators can, and should, hold me responsible for our financial results.
The role of the CFO
As CFO, I report to Grace Avon, our CEO. I work closely with company directors to develop
corporate goals and strategies. I coordinate, monitor, and direct Forthright's financial
activities.
That covers a lot of territory. In the financial world, information quality and accuracy are
critically important—I work closely with IT to make sure we get that right. That information
has to be communicated to company managers and external parties. When we need to raise
funds—that's also my job.
Last, but not least, strong financial controls and measurement tools are absolutely essential.
Financial Management Operating Units
Specific job titles and organizational structures vary according to a company's unique needs,
but all insurers must perform certain core financial functions, as shown below.
,An organization chart. Under Financial Operations are Accounting and Financial Reporting,
Treasury Operations, and Investment Operations. Separate is Internal Audit.
An insurance company's investment committee directs the company's internal audit
and control function.
a. True
b. False
A company's internal audit and control function is directed by the audit/risk committee. The
investment committee sets the company's investment policy and oversees investment
operations.
Let's look at how Forthright Financial organizes its financial operations, starting with its
accounting and financial reporting function.
accounting
A system or set of rules and methods for collecting, recording, analyzing, summarizing, and
reporting financial information.
financial reporting
The process of presenting financial data about a company's financial position, operating
performance, and flow of funds.
The controller
responsible for the timely and accurate collection and reporting of all of Forthright's financial
data
, The accounting function:
Records, tracks, and reports on financial transactions
Coordinates the budget process and oversees expense analysis
Prepares financial statements and reports for external users
Gathers, records, analyzes, and distributes financial information to company managers
Of the following stakeholders, select the ones Forthright would consider to be internal
users of its accounting information. Choose all that apply.
a. Regulators
b. Rating agencies
c. Board of directors
d. Policyowners
e. Managers
f. Investors
g. Taxing authorities
C & E - Internal users work inside the company and make decisions about the company's
operations. External users are outside the company and use the company's financial
information primarily to make investment, regulatory, and other decisions about the
company.
user information needs (managers)
Managers within the organization may use accounting information to
Assess their departments' day-to-day operations
Judge whether they are meeting their financial goals
Plan for future needs
Correct Answers
At a typical insurance company, which of the following areas are part of financial
operations? Choose all that apply.
a. Accounting and financial reporting
b. Treasury operations
c. Information technology
d. Investment operations
e. Internal audit
A, B, D, & E- All of these areas—except for information technology—are part of a typical
insurance company's financial operations. Although the IT department plays an essential role
in maintaining the quality of the data provided to financial managers, it is not technically part
of financial operations.
Board and Executive Roles
The financial management function
Provides information to stakeholders
Ensures that financial obligations are met
Ensures compliance with complex financial regulations
Generates adequate returns for the company's owners and customers
Role of the Board of Directors
- Investment committee: The investment committee sets Forthright's investment policy and
oversees investment operations.
,- Audit/risk committee: The audit/risk committee directs Forthright's audit and internal
control function.
The role of the Ceo
I approve our budget numbers. Then I manage our resources—in line with budget guidelines
and all current laws and regulations.
Technically I'm responsible for directing financial objectives and strategies, but I delegate
most of these responsibilities to senior financial officers.
However, make no mistake, the buck stops here! We are a publicly held company. Investors,
customers, and regulators can, and should, hold me responsible for our financial results.
The role of the CFO
As CFO, I report to Grace Avon, our CEO. I work closely with company directors to develop
corporate goals and strategies. I coordinate, monitor, and direct Forthright's financial
activities.
That covers a lot of territory. In the financial world, information quality and accuracy are
critically important—I work closely with IT to make sure we get that right. That information
has to be communicated to company managers and external parties. When we need to raise
funds—that's also my job.
Last, but not least, strong financial controls and measurement tools are absolutely essential.
Financial Management Operating Units
Specific job titles and organizational structures vary according to a company's unique needs,
but all insurers must perform certain core financial functions, as shown below.
,An organization chart. Under Financial Operations are Accounting and Financial Reporting,
Treasury Operations, and Investment Operations. Separate is Internal Audit.
An insurance company's investment committee directs the company's internal audit
and control function.
a. True
b. False
A company's internal audit and control function is directed by the audit/risk committee. The
investment committee sets the company's investment policy and oversees investment
operations.
Let's look at how Forthright Financial organizes its financial operations, starting with its
accounting and financial reporting function.
accounting
A system or set of rules and methods for collecting, recording, analyzing, summarizing, and
reporting financial information.
financial reporting
The process of presenting financial data about a company's financial position, operating
performance, and flow of funds.
The controller
responsible for the timely and accurate collection and reporting of all of Forthright's financial
data
, The accounting function:
Records, tracks, and reports on financial transactions
Coordinates the budget process and oversees expense analysis
Prepares financial statements and reports for external users
Gathers, records, analyzes, and distributes financial information to company managers
Of the following stakeholders, select the ones Forthright would consider to be internal
users of its accounting information. Choose all that apply.
a. Regulators
b. Rating agencies
c. Board of directors
d. Policyowners
e. Managers
f. Investors
g. Taxing authorities
C & E - Internal users work inside the company and make decisions about the company's
operations. External users are outside the company and use the company's financial
information primarily to make investment, regulatory, and other decisions about the
company.
user information needs (managers)
Managers within the organization may use accounting information to
Assess their departments' day-to-day operations
Judge whether they are meeting their financial goals
Plan for future needs
