Cloudy High-Yield Hedge Strategies and Cloudy Real Estate All Stars would be considered as alternative investments, according to the standards issued by AICPA. Typically, great examples of types of alternative investments are common/collective trusts, pooled separate accounts, stable value investments, private equity funds, hedge funds, real estate funds and etc. Because these funds have higher risk-return structure than normal index bonds, they are in the most of the time illiquid investments which will also have restrictions on the ownership transfer. Hedge funds are regularly engaged in aggressive strategies which can involve highly leveraged trading of derivatives; hence in this case, Cloudy High-Yield Hedge Strategies is definitely one type of alternative investment. Real Estate funds depend on the performance of the real estate market and real estate goes through private transactions instead of going national exchanges or over-the-counter market. In that sense, Cloudy Real Estate All Stars is another alternative investment. The notion behind benefit plans engaging in alternative investments is to try to diversify the investment strategy and at the same time, reach to a high overall return of the portfolio. But in terms of valuing these alternative investment strategies, it normally encompasses a wide range of methods. Since the NAV and shares held are provided by the Union, it might be more accurate for the engagement team to conduct further investigation on the procedures to get the fair value of alternative investments.
Question #2

The confirmation is not sufficient enough to support the audit existence evidence of these investments. According to AICPA’s official say:

“The existence assertion addresses whether alternative investments exist at a given date, and whether recorded transactions have occurred during a given period. The auditor obtains an