Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?
A)An independent custodian that has no direct contact with the employees who have recordkeeping responsibilities has possession of the securities.
B)The internal auditor verifies the marketable securities in the entity's safe each year on the balance sheet date.
C)The independent auditor traces all purchases and sales of marketable securities through the subsidiary ledgers to the general ledger.
D)A designated member of the board of directors controls the securities in a bank safe-deposit box.

Question

Quizplus · Accepted Answer

The best control to safeguard against the loss of marketable securities would be to have an independent custodian who has no direct contact with employees that have recordkeeping responsibilities. This would ensure that the securities are kept securely and without any interference from internal parties. The other options, such as internal audit verification, independent auditor tracing, or board of director control, may also be useful control procedures, but they do not provide the same level of security and independence as having an independent custodian.

Which of the Following Controls Would an Entity Most Likely