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AICPA issues three audit risk alerts.

The American Institute of CPAs issued three new audit risk alerts designed to reflect concerns brought on by the unstable economic conditions of the last two years.

* Employee Benefit Plans Industry Developments--1992 (product no. 022086) reminds auditors that employee benefit plans have been affected by the lowest interest rates in years. As a result, plan investment managers have searched out more complex strategies, employing collateralized mortgage obligations, real estate mortgage investment conduits and other specialized and more speculative investment vehicles in a quest for greater returns. Auditors of employee benefit plans should under- stand and consider the heightened risk in these investments. The audit risk alert also reminds auditors to consider the risk in investment contracts issued by troubled banks, savings institutions and insurance companies.

* Not-for-Profit Organizations Industry Developments--1992 (product no. 022095) alerts auditors to the impact the economy has had on not-for-profit organizations, particularly in raising funds needed to render services traditionally provided by the organization. The alert also reminds auditors of issues generated by the media's recent focus on management compensation and fringe benefits.

* State and Local Governmental Developments--1992 (product no. 022097) reminds auditors that political as well as economic factors may tempt some state and local governments to seek out "one-shot (accounting) adjustments" and other accounting gimmicks to balance budgets. The audit risk alerts are available for $5 per copy from the AICPA order department. Telephone: (800) 334-6961 [(800) 248-0445 in New York State].
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Aug 1, 1992
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