Question

When reviewing the administration of employee benefit accounts for prohibited transactions, the trust auditor would NOT criticize deposits by employee benefit accounts in deposit vehicles of the trustee bank if:

a. the deposits bear a reasonable interest rate and are authorized by the plan.
b. the prohibited transactions are approved by the Trust Committee.
c. the deposits are limited to 10% of the market value of plan assets.
d. the deposits are consistent with the investment objectives of the plan.

Answer 1

The trust auditor would not criticize deposits by employee benefit accounts if they meet specific conditions set by the plan and approved by the Trust Committee.

Step-by-step explanation:

The subject of this question is Business.

When reviewing the administration of employee benefit accounts for prohibited transactions, the trust auditor would not criticize deposits by employee benefit accounts in deposit vehicles of the trustee bank if they meet certain conditions.

1. The deposits bear a reasonable interest rate and are authorized by the plan.
2. The prohibited transactions are approved by the Trust Committee.
3. The deposits are limited to 10% of the market value of plan assets.
4. The deposits are consistent with the investment objectives of the plan.

All four options are relevant in determining whether or not the deposits would be criticized, and as such, the correct answer depends on the context of the specific situation being audited.