Transaction cycle controls are based on a separation of functions within a business process.

Question

Quizplus · Accepted Answer

Transaction cycle controls are designed to ensure that no single employee has complete control over a transaction from start to finish. This is achieved by separating tasks and assigning different individuals to perform them. The goal is to prevent errors, fraud, and other types of mismanagement due to an insider's ability to manipulate or exploit a system for personal gain. By establishing a clear division of roles and responsibilities, transaction cycle controls help ensure the reliability and accuracy of financial information and reduce the risk of financial loss or legal liabilities.

Transaction Cycle Controls Are Based on a Separation of Functions