So you have made some time to work on Step 1 – Developing a Risk Assessment. It is time to move on to Step 2: Determining Tests to be used.
Based on the risk assessment, which test will allow you to test those risks? Here are a couple to ponder until next week:
- Transactional – those tests based on transactions (reviewing trades against client agreements, current holdings and IPS prior to submission)
- Periodic – those that occur at various intervals (Code of Ethics personal securities transactions report review)
- Forensic – those done over time and looking for a pattern (unreported trade errors)
Next I’ll discuss some specific tests to consider.