When a client engages in transactions involving derivatives,the auditor should:

Question

Quizplus · Accepted Answer

Reviewing agreements underlying the derivative transactions is an important part of auditing the client's financial statements as it helps the auditor to ensure the accuracy and completeness of the financial information presented. It also helps to identify any risks involved in these transactions. Therefore, option A is the best choice. Option B may not be sufficient as relying solely on the client's broker may not be reliable. Option C is not necessary unless the risks of derivative transactions are significant and may have a material impact on the financial statements. Option D is also not necessary unless there are significant risks associated with these transactions.

When a Client Engages in Transactions Involving Derivatives,the Auditor Should