An auditor's inquiries of management disclosed that the entity recently invested in a series of energy derivatives to hedge against the risks associated with fluctuating oil prices. Under these circumstances, What should the auditor do?
1) Verify the accuracy of the energy derivatives
2) Assess the effectiveness of the hedge against fluctuating oil prices
3) Review the entity's financial statements for any related disclosures
4) Evaluate the entity's risk management policies and procedures