The following are risks relating to marketable securities.
Categorize each risk as relating to either (a) inherent or fraud risk or (b) control risk.
1. Management manipulation of the classification of securities to achieve preferable valuation treatment, for example, market value versus amortized cost.
2. Lack of policies over valuation or classification of securities.
3. Management manipulation of the valuation of market value if the securities are thinly traded.
4. Lack of policies over purchase or sale of securities.
5. Lack of monitoring of changes in securities balances.
6. Lack of segregation of duties between individuals responsible for making investment decisions and those responsible for the custody of securities.
7. Risk of theft of securities if they are not physically controlled, or if authorization and monitoring over their purchase or sale is not adequate.
8. Risk of sudden market declines, which would adversely affect the valuation of securities.
9. Lack of involvement or oversight by internal audit in relation to securities.

  • CreatedSeptember 22, 2014
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