5% reportable transaction

[wsp]

Company offers a straight profit sharing plan. Assets are managed and are not employee directed. Assets are split into 5 different brokerage accounts. Each account has a different investment philosophy so that when combined offers a diverse investment portfolio.

Each time there is a sell of an asset the brokerage houses turn around and buy shares in a Liquid Asset Fund (MM fund) to house the money instead of leaving it in cash. Then when they buy a new asset they sell the Liquid Asset Fund to generate the cash needed to pay for the new asset. This is all automated....

Auditor is claiming that these buys and sells of the Liquid Asset Fund constitutes a series of transactions and are reportable.

This can't be right, is it??? Trust is 10 million so it only takes 500k in transactions throughout the year to reach this point...only a few buys and sells plus a bond maturing to hit it.

[austin3515]

That's right, but so what? IT's not a prohibitted transaction, it's just a "big transaction."

No harm done.

[wsp]

That's right, but so what? IT's not a prohibitted transaction, it's just a "big transaction."

No harm done.

Except the expense that will be charged to the client and the time that will be required to add up 600 different numbers and provide support so that the auditors can then review those numbers and charge the client more is doing harm if it's unnecessary.

[rcline46]

I would bet that if you pushed the brokerage houses, they can provide a summary!

[austin3515]

Oh... I agree with you, that is a pain in the @$$.

Actually, I should've read your post more closely. I don't think that is a series of transacitons. The point of looking at a series oft ransactions is to avoid someone simply circumventing the reporting rule by breaking one big transaction into a bunch of small ones. I think if you read the regs on these series transactions you'll find that there must be some sort of a common thread between the transactions? Maybe, but maybe not...

[wsp]

Oh... I agree with you, that is a pain in the @$$.

Actually, I should've read your post more closely. I don't think that is a series of transacitons. The point of looking at a series oft ransactions is to avoid someone simply circumventing the reporting rule by breaking one big transaction into a bunch of small ones. I think if you read the regs on these series transactions you'll find that there must be some sort of a common thread between the transactions? Maybe, but maybe not...

I've read it...and read the "Guide to Auditing Employee Benefit Plans" to try to get the auditors persepective. I still don't agree with them. I'm with you on that it's not a series...I'd even go so far as to question whether it's a security as most MM's are actually considered cash or mutual funds. When looking at the form itself it's almost pointless to fill out: Purchase Price: 1$ Selling Price: 1$ Expense Incurred: 0 Cost of Asset ????? which time??? Current value of asset on transaction date??? Which time??? Net gain or (loss): 0

Rediculous and a waste of effort.

There must be auditors that go through this board....Do you count them? If so, how do you report it on line 4j?