Which of the following duties would indicate a weakness in internal controls?
A)The accounting function is under the controller.
B)The custodianship of cash is the responsibility of the treasurer's function.
C)The internal auditor reports to the board of directors.
D)The custodianship of buildings and equipment is the responsibility of the controller's function.

Question

Quizplus · Accepted Answer

The custodianship of buildings and equipment being the responsibility of the controller's function indicates a weakness in internal controls as it allows one department to have too much control and authority over assets, increasing the risk of misappropriation or misuse of assets. A strong internal control system separates custodianship and accounting functions to prevent fraud or errors. Hence, options A, B, and C are not indicative of a weakness in internal controls.

Which of the Following Duties Would Indicate a Weakness in Internal