Ellie Enterprises †Deloitte Audit Case Essay

Alternative InvestmentsAmong the quintuplet gillyflowers, leash of the funds, Cloudy Retirement 500 Index, Cloudy High-Yield Hedge Strategies, and Cloudy Real Estate All starts, argon alternative investitures. Those three funds, as the case states, are not registered under the Investment Company proceeding of 1940 or under the Securities behave of 1933. Thus, they are not offered to the investing public or are not been required to offer signifi basist information to public. Moreover, the investment product held by Cloudy High-Yield Hedge Strategies is hedgerow fund. It is not traditional investment, such as stock or bonds, and is difficult to determine the current food market regard as.Existence of the investmentsThe cheque did not house adequate competent audit evidences to support the existence of the investments therefore, the mesh team up must perform additional procedures. AU Session 332 states, Confirmation of the holdings on a security-by-security basis typically would constitute adequate audit evidence with respect to the existence assertion. The confirmation join provided, which is on fund-by-fund basis, is not detail enough to typically be considered as adequate audit evidence. Moreover, the audited financial teaching of the alternative investment, which could provide signifi derrieret audit evidence, is not available before the issuance date of the auditors treat on Ellies consolidated financial statements. This fact further proves that the struggle team motivations to behaviour substantive procedures. To assess the existence of the investments, following procedures posterior be performed. First, the bout team can request legal proceeding involved in each five of funds during the funds fiscal years. Actual transactions prove that Ellies investments have been held in those five different funds.Second, as the case states, the Committee sporadically review plan performance and assets allocation. Therefore, the Committee must ke pt reports and memos regarding their plan performance or discussions with Union. The troth team can stack away documents related to Ellies investments in those five funds from Ellie and Union. Documents from the investor entity and trustee entity can prove the existence of investment activities. Moreover, by comparing those documents, the engagement team can test whether Unions investment behavior has aligned with the strategies orany adjustments make to the Ellies investments. An example can further illustrate. For example, the Committee decided to change the investment allocation. It is expected to see Union held documents which contain expand showing the change of the strategy, specific investment that Union made, and the performance after adjustments. Such documents are sufficient evidence to prove that Ellies investments are in the funds and being appropriately management by Union. Lastly but no lease, obtaining related information directly from a third party may also be he lpful in this case. The engagement team can directly touch on five fund managers and inquire them whether Ellies investments were held in the funds.Value of the investmentsSimply confirming investments in the aggregate incomplete prove the existence of the investments, nor support the valuation of the investments. Furthermore, there is a time lag in reporting between the date of the financial statements of the funds and the date of the auditors report on Ellies consolidated financial statements thus, the engagement team should perform additional procedures. Cloudy Retirement intermediate-Term U.S. TreasuryTo distinguish the accuracy of the amount of share held by Ellie, the engagement team could request the fund manager to provide documents stating the amount of shares held by Ellie. This fund is registered with the SEC under the Investment Company Act of 1940 and under the Securities Act of 1933. Normally quoted market prices for such funds are available from sources such as fi nancial publications, the exchanges, or NASDAQ. The engagement team could obtain the quoted market prices of the fund and check the prices with those on the confirmation. Cloudy High-Yield Hedge StrategiesSince this fund is not registered with SEC under the Investment Company Act of 1940 or under the Securities Act of 1933, the engagement team is unable to get quoted market prices and compare with numbers on the confirmation. However, the engagement team could request a more detailed confirmation providing information of the underlying investments. Next step the engagement team can take is to evaluate the underlying investment and the presumableness of the assumptions used in fair valuate calculation. Sinceevaluation may involve a lot of specialized knowledge and techniques, the engagement team could expend a specialist. Under the situation that the engagement team did not receive a detailed confirmation of the underlying investments, there are several procedures can help with th e assessment.First, the engagement team can collect previously audited financial statement for the funds to compare information the team obtains for this year. If Ellie didnt make a lot of change on its investments and the performance of funds held by Ellie are stable in novel years, but investment balance of this year is very different from ones of previous years, the engagement team need to increase the risk and take a closer look at the evaluation of Ellies investment of this year. Other than previously audited financial statement for the funds, meeting minutes, memos, or summaries that document valuation or judgments made during managing the investment are evidence that auditor should collect and review to help assessment. Second, the engagement team can call or visit the auditors of Union to ask their opinion about the valuation of the investments that Union managed. Besides, the engagement team also could pick some sample transactions and then test the fair value measurement involved in those transactions to see whether the fair value measurement are reasonable or comply with industry standard. Last but not least, the auditing team can directly contact the five fund managers to check out Ellies balance.