AFS Security Pricing

We use a third party to provide security pricing for the available for sale securities. The 3rd party is a reputable, established, regional brokerage and we have a clear SAS70 on them. The SAS70 indicates the controls over market pricing are in place & functioning. Our external auditors have recommended that management review the monthly pricing reports for proper pricing sources. Management contends that they don't have the expertise to question the sources and we should instead fall back on the SAS70 for our comfort level with pricing. Has anyone else encountered this and, if so, what does management do to ensure the pricing sources are proper? Thanks!

Get new external auditors?

But seriously, if you contact your third party provider, they should be able to provide you with literature that describes the sources and methodologies they use to price securities ... and you should find that such pricing sources and methodologies are consistent with those used by other reputable brokerage firms.