When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the:
A)trust company has no direct contact with the entity employees responsible for maintaining investment accounting records.
B)securities are registered in the name of the trust company, rather than the entity itself.
C)interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities.
D)trust company places the securities in a bank safe-deposit vault under the custodian's exclusive control.

Question

Quizplus · Accepted Answer

When the trust company has no direct contact with the entity employees responsible for maintaining investment accounting records, it reduces the risk of collusion and fraud, as there is a separation of duties and less opportunity for manipulation.

When an Entity Uses a Trust Company as Custodian of Its