Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?

Question

Quizplus · Accepted Answer

An independent trust company that has no direct contact with the employees who have recordkeeping responsibilities has possession of the securities is the best control against the loss of marketable securities as it eliminates the possibility of employee theft or fraud. The trust company will have its own procedures and controls for safeguarding the securities, reducing the risk of loss. Internal and independent audits are also important controls, but they may not prevent theft or fraud from occurring. A designated member of the board of directors controlling the securities may create a conflict of interest.

Which of the Following Controls Would an Entity Most Likely