A Missouri preneed auditor recently requested an explanation from a client why certain accounts were underfunded. The handful of accounts were “underfunded” by varying amounts of a few dollars to twenty dollars. The common fact with each was an initial deposit or substantial deposit in the month preceding the Federal Chairman’s remarks that sent the investment markets tumbling. The conservative government bond was especially vulnerable.
It is inevitable that preneed auditors have to look beyond whether the consumer’s payments made it to the trust. But, preneed trusts cannot remain parked in Govies and provide operators the return they need to keep pace with rising costs. A diversified trust will have market fluctuations. The challenge for auditors will be distinguishing normal investment fluctuations from excessive fees or impaired assets.