Which of the following statements is most correct with respect to separation of duties?
A) Employees should not have temporary and permanent custody of assets.
B) Employees who authorize transactions should not have custody of related assets.
C) It is permissible to allow an employee to open cash receipts and record those receipts.
D) Employees who authorize transactions should have recording responsibility for these transactions.

Question

Quizplus · Accepted Answer

Separation of duties is a key internal control mechanism designed to prevent fraud and errors. According to this principle, employees who authorize transactions should not have custody of related assets. This helps prevent them from misusing or stealing the assets for their personal gain. The other options in the question violate the principle of separation of duties in different ways. For example, allowing an employee to both open cash receipts and record them creates an opportunity for theft or manipulation. Similarly, giving an employee both temporary and permanent custody of assets creates a risk of mismanagement or loss. Finally, allowing employees who authorize transactions to also have recording responsibility creates a risk of errors or fraud, as they could manipulate the records to cover up their actions.

Which of the Following Statements Is Most Correct with Respect