A company's accountant was able to approve payment of invoices and write company checks to a family member, with whom the accountant would split the proceeds.The accountant covered up the theft with journal entries in the AIS.Which duties should be separated to prevent such problems in the future?
A)Authorization and custody
B)Custody and recordkeeping
C)Authorization and recordkeeping
D)Control environment and control activities

Question

Quizplus · Accepted Answer

The authorization and recordkeeping duties should be separated to prevent this type of fraud in the future. The accountant was able to approve payments and then cover up the theft with journal entries, indicating a lack of separation of authorization and recordkeeping duties. If these duties were separated, the accountant would not have been able to both approve the payments and conceal the fraud in the AIS.

A Company's Accountant Was Able to Approve Payment of Invoices