Assume the following additional information about the use of financial derivatives for the operational audit described in
Question:
1. Company policy limits financial derivatives strictly to instruments that mitigate financial risk. The treasury function is not allowed to make speculative investments in derivatives.
2. Derivatives cannot constitute more than 30 days of cash needs.
3. Hedging can and should be used only for foreign currency fluctuations. Company policy prohibits hedging for speculative purposes.
Required
a. Based on these policies, what are the major objectives for an audit of financial derivatives and hedging contracts?
b. Is the audit primarily a compliance audit, an operational audit, or both? Explain.
c. Write an audit program to address the audit objectives identified in part (a).
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Related Book For
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
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