3 Sy e ay 5 ; Exhibit a) ‘l tisk Analysis Questionnaire; Cash and Financial Instruments (continued) FINANCIAL INSTRUMENTS, INCLUDING MARKETABLE SECURITIES 1. ‘Does the client regularly invest in financial instruments? 2, Does the client have written policies and guidelines regarding imestments in financial instruments? Are the policies approved by the board of directors? What process is used to authorize investments in financial instruments? . Does the client have a clear polity as to whether financial instruments. are propery classified as “held for trade” versus “eld to ‘matuity"? fs there evidence thatthe cient follows the policy? 4, Has management changed the classification of Securities during the year from marketable securities to “holdtematurity” Securi- ties? If yes, what is the teeson fr the change? Ifthe amounts were significant, were they reviewed by the audit committee end «do the avo committee and the board concur with the change? 1s there a ready market for the securities classified as financial instruments? If te Seburties are not waded on a national stock exchange, present evidence on the existence of marketability—including depth and breadth of transactions inthe secur. . If there is not a liquid market forthe financial instruments, how does management go about estimating the value of the seeuritias that need to be marked to current market value? To what extent does the elent own financial derivatives as part ofits securty holdings? What are the econamie factors that affect the derivatives? Has the client evaluated the market value ofthe securities? 8, Doos the clont systematically dant the risks associated with is holdings of financial instumants? Has the board of diectors ‘approved the risk associated with the investment in nontraitional securities? 8, Does the company require board approval of significant investments in financial derivatives? If yes is there evidence thatthe company bot (@) thoroughly understands the rss associated wit the investments and (o) can quantify an manage that risk? \What is the company’s exposure to potential losses on financial instruments? What impact on the clint would the potential default of the securities have? Are the securities sensitive to changes in interest rates? If yes, has the client prepared a sensitivity analy sis of the securities? 44. Does the company establish limits over the amounts that can be invested in various types of financial instruments with speci counterparties or by individual traders? How are these limits derived and enforced? 12. Does the organization provide for effective segregation of duties among individuals responsible for making investment and credit decisions and those responsible for the eustody of the securities? 13, Does the internal audit department conduct regular aueits of the organization's contiols over marketable Securities? If yes, review fecent reports, 5 1 10,