LOMA 291 MODULE 4 UPDATED QUESTIONS AND 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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅- 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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅A system or set of rules and methods for
collecting, recording, analyzing, summarizing, and reporting financial information.
, financial reporting - CORRECT ANSWER✅✅✅The process of presenting financial data
about a company's financial position, operating performance, and flow of funds.
The controller - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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) - CORRECT ANSWER✅✅✅Managers within the
organization may use accounting information to
Assess their departments' day-to-day operations
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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅- 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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅A system or set of rules and methods for
collecting, recording, analyzing, summarizing, and reporting financial information.
, financial reporting - CORRECT ANSWER✅✅✅The process of presenting financial data
about a company's financial position, operating performance, and flow of funds.
The controller - CORRECT ANSWER✅✅✅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 - CORRECT ANSWER✅✅✅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) - CORRECT ANSWER✅✅✅Managers within the
organization may use accounting information to
Assess their departments' day-to-day operations
