An Auditor's Inquiries of Management Disclosed That the Entity Recently

question 596

Multiple Choice

An auditor's inquiries of management disclosed that the entity recently invested in a series of energy derivatives to hedge against the risks associated with fluctuating oil prices. Under these circumstances, the auditor should:

• A) Perform analytical procedures to determine if the derivatives are properly valued.
• B) Examine the contracts for possible risk exposure and the need to recognize losses.
• C) Confirm the marketability of the derivatives with a commodity specialist.
• D) Document the derivatives in the auditor's communication with those charged with governance.

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Definitions:

Shared Common Values

Shared common values are fundamental beliefs or principles that are accepted and held in common by a group, leading to a unified organizational culture.

Organizational Culture

The shared values, beliefs, norms, and practices that shape the social and psychological environment of a business or organization.

Organizational Culture

The shared values, beliefs, and practices that shape the social and psychological environment of an organization.

Social System

A complex set of human relationships interacting in many ways, influencing patterns of behavior and culture within a defined boundary.