What is the single most effective control that avoids allowing one person to be in a position to perpetrate and then conceal errors or inappropriate activities?
A) The segregation of authorization of transactions, custody of related assets, and modification or creation of related data and program files (or paper- based records).
B) The requirement that each employee take a vacation each year.
C) The establishment of an internal auditing department.
D) The bonding of personnel in positions that necessitate handling cash and negotiable securities.

Question

Quizplus · Accepted Answer

The segregation of authorization of transactions, custody of related assets, and modification or creation of related data and program files (or paper- based records) is known as the principle of segregation of duties, which is the most effective control to prevent fraud and errors. This principle ensures that no one person has complete control over a transaction or process, making it difficult for an individual to perpetrate and then conceal errors or inappropriate activities. The other options may have some level of effectiveness, but they are not as significant as the segregation of duties.

What Is the Single Most Effective Control That Avoids Allowing