An Auditor's Inquiries of Management Disclosed That the Entity Recently

Multiple Choice

An auditor's inquiries of management disclosed that the entity recently invested in a series of energy derivatives to hedge against the risks associated with fluctuating oil prices. Under these circumstances, the auditor should:

A) Perform analytical procedures to determine if the derivatives are properly valued.
B) Examine the contracts for possible risk exposure and the need to recognize losses.
C) Confirm the marketability of the derivatives with a commodity specialist.
D) Document the derivatives in the auditor's communication with those charged with governance.