Procedures requiring that the recording of asset transactions be separated from the custody of those assets:
A) Will uncover collusion among employees
B) Are important only in very large businesses
C) Are especially important in handling cash
D) Make it easy for an employee to cover up the theft of an asset
E) None of the above

Question

Quizplus · Accepted Answer

Separating the recording of asset transactions from the custody of those assets is a fundamental internal control principle designed to prevent theft and errors. This is especially important for highly liquid assets like cash, where the risk of misappropriation is higher.

Procedures Requiring That the Recording of Asset Transactions Be Separated