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Dharma Pharmaceuticals Pty Ltd (DPPL) imports a number ofpharmaceutical products. In order tohedge its foreign currency transactions, DPPL entered into anumber of forward rate agreements thisyear. Prior to this time DPPL had had little exposure toderivative instruments, but a series of badexperiences resulting from fluctuating exchange rates convincedthe company that a hedging strategywas necessary. During planning for the audit of DPPL, thecompany's hedging arrangements wereidentified as inherently risky and increased testing was carriedout in this area. A number of smallerrors were noted in accounting for hedge transactions, butthere did not appear to be any materialerrors and as such no adjustments were made. A review of theaudit file suggests that the errors notedwere a result of inexperience and poor controls in the area.While all of the errors were brought to theattention of the treasurer, who is responsible for the company'shedging strategy, no further action hasbeen taken to date.REQUIRED:Explain what further action the auditor should take inresponse to the errors and control weaknessesidentified. Justify your response.