Adequate internal control over financial investments is an important process for clients holding these investments. Auditors need to be sure they understand and assess these controls.

Financial investments can result in very complex audit procedures and often require auditors with specific skills and knowledge. Often specialists are brought in to perform the substantive procedures, but most auditors are able to assess and understand the controls relevant to financial investments.

Match the listed internal controls procedures with their objectives.

1. Inspector reports by internal auditors on their review of securities and derivatives

2. Inspect monthly brokerage reports on securities owned, purchased, and sold

3. Review and test reports of investment activity for the investment committee

4. Trace several transactions for purchases and sales of investments through the accounting system

Objectives

a. Ensure transactions are recorded and classified properly

b. Ensure policies written are being followed

c. Verify that internal auditors observations are consistent with those of external auditors

d. Ensure reports toe to client activity