Liability on Account of Outstanding Forward Exchange Contracts
The auditor may verify the outstanding forward exchange contracts with the register maintained by the branch and with the broker’s advice notes. In particular, the net “position” of the branch in relation to each foreign currency should be examined to see that the position is generally squared and not uncovered by a substantial amount. The net “position” as reported in the financial statements may be verified with reference to the foreign exchange position report prepared by the back office.