Investment Training and Consulting Institute, Inc.

Understanding and Auditing Investment Activities

Dates: September 21-22, 2017

Location: San Diego/La Jolla, CA

Course Time*: 8:30 am – 5:00 pm

16 CPE

*Note – Registration begins at 8:00 am on the first day of class.

Our introductory investments course has been updated to reflect the every-changing investments market including new securities, new operational procedures, new regulations  and new accounting risk — making this a class you cannot afford to miss.  Focusing on the “buy-side” of the industry, this class is designed for internal auditors who have been charged with auditing investment from securities execution all the way through investment settlement, reporting and recording.

This class will walk you through the traditional markets such as  fixed income, equity and structured products, alternative investments and will discuss the audit areas to focus on in each of these areas. The course will also discuss the specific responsibilities of the front, back and middle offices of a typical investment division and highlight  audit procedures and techniques to review each of these divisions.


  • Discuss the most common audit issues that are uncovered in a traditional review of the Investment areas.
  • Learn the most common securities that are traded in the short-term and capital markets. Briefly discuss derivatives and the alternative asset sectors to ensure you would be able to identify these securities and any red flags in your review.
  • Discuss the cash management and forecasting process and internal controls that should be present to safeguard critical liquid assets.
  • Learn the audit issues surrounding traditional securities as well as structured products.
  • Review the internal controls that “bullet-proof” your investment portfolio and discuss the leading practices of other companies.
  • Study the red flags to watch for after the recent credit crisis to make sure your investment portfolio has the right controls in place and they are functioning effectively.
  • Introduce the  Investment infrastructure and the roles of the front, middle and back office to ensure proper segregation of duties is present in your company.
  • Discuss the problems with the “repo” and security lending area that have been seen in the market of late.
  • Learn about auditing portfolios with external management and the risks unique to the externally managed, or ‘manager of managers’, structure
  • Develop audit program steps in class to get you started once you return home.


Introduction to Course

  • Why Audit the Investment and Treasury Function?
  • Typical Functions of the Departments
  • Review Course Topics and Objectives

Understanding the Investment Environment

  • Introduction to the Investment Process
  • Understanding the Short-term market
  • Reviewing the Major Securities in the Capital Markets
    • Traditional Fixed Income
    • Structured Securities
    • Equities
  • Understanding the Alternative Asset Class: Private Equity and Hedge Funds

Understanding the Derivative Environment: An Introduction

  • The Importance of Auditing Derivatives
  • What’s Going Wrong?
  • Derivative Debacles of the Past
  • Hedging vs. Speculation
  • Key Risks and Controls

Understanding the Cash Management Function

  • Reasons to Hold Cash in the Portfolio
  • Best Practices for “Economizing” Cash
  • Internal Controls in the Cash Management Process
  • Best Practices in Cash Management

Understanding and Auditing the Investment and Treasury Infrastructure

  • The Roles of the Back Office
    • Back office systems and controls
    • Understanding the pitfalls of investment reporting
    • Back Office Audit Objectives and Controls
  • The Roles of the Front Office
    • Discussing the portfolio management process
    • Front Office Red Flags
    • Front Office Audit Objectives and Control
  • The Roles of the Middle Office
    • Discussing the risk management role
    • Discussing the Compliance Role
    • Is it really independent?
    • Middle Office Audit Objectives and Controls
  • Auditing External Managers
    • Considerations for Auditing Externally Managed Assets

Course Duration: 2 day(s)
CPE Hours Available: 16
Knowledge Level: Intermediate
Field of Study: Auditing, Accounting, Specialized Knowledge & Applications
Prerequisites: ​General Knowledge of Audit & Investments
Advance Preparation: None
Delivery Format: Group-Live