The separation-of-duties feature of internal control can be negated when the owner of a small company has an active involvement in the company.

Question

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The separation-of-duties feature of internal control requires that different individuals or departments are responsible for different aspects of a task or transaction to ensure there is an appropriate level of checks and balances. However, in a small company, it may not be possible to completely separate all duties, and the owner may have an active involvement in various aspects of the business, potentially negating the separation-of-duties feature of internal control.

The Separation-Of-Duties Feature of Internal Control Can Be Negated When