Joe is warehouse custodian and also maintains the accounting record of the inventory held at the warehouse. An assessment of this situation indicates
A) documentation procedures are violated.
B) independent internal verification is violated.
C) segregation of duties is violated.
D) establishment of responsibility is violated.

Question

Quizplus · Accepted Answer

Segregation of duties is violated as Joe has incompatible duties of being custodian of the warehouse and maintaining accounting records, which creates a risk of errors or fraud going undetected. It is important to have different individuals responsible for custody of assets and accounting for them to ensure proper internal control.

Joe Is Warehouse Custodian and Also Maintains the Accounting Record