Checklist for Investment Audit


1)   Are responsibilities for initiating, evaluating, and approving transactions adequately segregated from those for detail accounting, general ledger, and other related functions?
2)   Are responsibilities for initiating transactions adequately segregated from those for final approvals committing state resources?
3)   Are responsibilities for monitoring investment market values and performance adequately segregated from those for investment acquisition?
4)   Are responsibilities for maintaining detail accounting records adequately segregated from those for general ledger entries?
5)   Are custodial responsibilities for securities or other documents evidencing ownership or other rights assigned to an official with no accounting duties?
6)   If EDP is used, is the principle of segregation of duties maintained within processing activities?


1)   Do approval procedures include the following?
a)   If applicable, procedures adequate to ensure only investments permitted by law are acquired?
b)   Formal establishment and periodic review of investment policy guidelines?
c)   Integration of the investment program with the cash management program and with expenditure requirements?
d)   Established authority and responsibility for investment-opportunity evaluation and purchase?
e)   Periodic evaluation of the performance of the investment portfolio by persons independent of investment portfolio management activities?
(i)   Also verification all income due from investments has been received?
f)    Formal procedures governing the level and nature of approvals required to purchase or sell an investment?
g)   Competitive bidding for certificate-of-deposit purchases?
2)   Do custody procedures include the following?
a)   Adequate physical safeguards and custodial procedures over the following?
(i)   Negotiable and nonnegotiable securities owned?
(ii)   Legal documents or agreements evidencing ownership or other rights?
b)   Dual signatures or authorizations to obtain release of securities from safekeeping or to obtain access to the governmental unit’s safe deposit box?
c)   Authorization, by the legislative body, of persons with access to securities?
d)   Registering all securities in the name of the governmental unit?
e)   Periodic inspection or confirmation of securities from safekeeping agents?
f)    Bonding of individuals with access to securities?
3)   Do detail accounting procedures include the following?
a)   Maintenance of detail accounting records for investments
(i)   by the investment department?
(ii)   by the accounting department?
b)   Procedures to ensure transactions arising from investments are properly processed, including income and amortization entries, if applicable?
c)   Controls to ensure investment earnings are credited to the fund from which resources for the investment were provided?
d)   A periodic comparison between income received and the amount specified by the terms of the security, or from publicly available investment information?
e)   Controls to ensure transactions are recorded on a timely basis?
4)   Do general ledger procedures include the following?
a)   Reconciling the detail accounting records with the general ledger control?
b)   Periodic review of the nature of invest­ments included in general ledger balances?