Which of the following statements is most correct with respect to separation of duties?
A) A person who has temporary or permanent custody of an asset should account for that asset.
B) Employees who authorize transactions should not have custody of the related assets.
C) Employees who open cash receipts should record the amounts in the subsidiary ledgers.
D) Employees who authorize transactions should have recording responsibility for these transactions.

Question

Quizplus · Accepted Answer

Separation of duties is a key internal control principle that involves dividing responsibilities for a particular process or transaction among multiple individuals to prevent fraud or error. Option B correctly reflects separation of duties by stating that employees who authorize transactions should not have custody of the related assets. This ensures that no single person has complete control over a transaction from start to finish, reducing the risk of theft or manipulation. Options A and C are partially correct but do not fully reflect the concept of separation of duties, while Option D is incorrect, as it violates the principle by combining authorization and recording activities in the same person.

Which of the Following Statements Is Most Correct with Respect