1) An internal auditor plans to conduct an audit of the adequacy of controls over investments...
1) An internal auditor plans to conduct an audit of the adequacy of controls over investments in new financial instruments. Which of the following would NOT be required as part of such an engagement:
a. Determine if policies exist that describe the risks the treasury may take and the types of instrument in which the treasurer may make investments.
b. Determine the extent of management oversight over investments in sophisticated instruments.
c. Determine whether the treasure is getting higher or lower rates of return on investments than are treasurers in comparable organizations.
d. Determine the nature of controls established by the treasurer to monitor the risks in the investments.
Homework Answers
The Answer is Option C) The reason is auditor is not bound to check whether the treasury is getting higher or lower rate of return on investments when compared to other organizations. Also this check is not an audit of adequacy of controls over investments.
An auditor is bound to conduct an audit of adequacy of controls over investments in new financial instruments and it will include
a) Check Organisation policies for investments and see risks treasury may take and type of instrument in which treasury can invest
b) Determine extent of management oversight over investments in sophisticated instruments
c) Determine nature of controls established by treasurer to monitor the risks in the investments.
Hence options A) B) and D) are not the answers
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