COURSE FEATURES

• 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.
• 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 in this volatile inflationary market 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.

COURSE OUTLINE

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