Trust company auditing;

              70 HASKINS & SELLS November
Trust Company Auditing
A TRUST company is a hybrid organi-zation
incorporated under the laws
of some one of the various States or of the
District of Columbia. Any attempt to
classify a trust company as to the kind of
business transacted meets with difficulty, in
that many of them carry on a banking
business in addition to performing the
function of a trustee, while many others
combine these functions with title insur­ance
and what-not.
In the State of New York, Laws of
1914, Chapter 369, "when authorized by
the Superintendent of Banks, as provided
by Section 23 of this Chapter, seven or
more persons may form a corporation to
be known as a trust company. Such per­sons
shall subscribe and acknowledge an
organization certificate, in duplicate, which
shall specifically state:
(1) The name by which the trust com­pany
is to be known.
(2) The place where its business is to
be transacted.
(3) The amount of its capital stock
(ranging from $100,000.00 to $500,-
000.00, depending upon population) and
the number of shares into which such capi­tal
stock shall be divided.
(4) The names and places of residence
of the incorporators.
(5) The term of its existence, which
may be perpetual.
(6) A declaration that each incorpor­ator
will accept the responsibilities and
faithfully discharge the duties of a director
therein, if elected to act as such, when au­thorized
by the provisions of this chapter."
"Every trust company shall . . . . .
keep on deposit with the Superintendent of
Banks interest-bearing stocks or bonds of
the United States, or of this State, or of any
city, county, town, village, or free school
district in this State authorized by the Leg­islature
to be issued to the amount in value
of ten per centum of its capital stock,"
(but not less than $20,000 to $100,000,
depending upon the population of the
place in which the company is located.)
Trust companies derive their corporate
powers from the general and stock cor­poration
laws of the State, the special pro­visions
of the banking law (Consolidated
Laws of New York, Chapter 2, Article 5,
Paragraph 185), and such additional pow­ers
as may be granted to them under their
respective charters.
Most trust companies in this State are
members of the Clearing House Associ­ation,
and many of the leading ones are
members of the Federal Reserve System.
In this latter particular, the trust compa­nies
are rapidly falling into line.
A trust company has as its object the
making of profit, like any mercantile or­ganization.
It is divided, generally speak­ing,
into two parts: the banking depart­ment
and the trust department. Today
many trust companies have foreign depart­ments.
The functions of the banking depart­ment
are, in a general sense, to receive de­posits,
make loans, invest any surplus
funds, and maintain the necessary legal re­serves.
The following are the functions of the
trust department:
Establish and maintain trusts with—
(A) Individuals.
(B) Corporations.
(A) Called Individual or Personal Trusts:
(1) Serving as depositary under
agreements with living per­sons.
(2) Serving as Executor and Trus­tee
under wills.
(3) Serving under appointment of
courts:
(a) Substituted Trustee under
agreement or will.
(b) Guardian of minors.
(c) Trustee for incompetents
(B) Called Corporate Trusts :
(1) Trustee under Mortgage to se­cure
bonds: