The three types of functions that normally should be segregated to promote internal control are
A) recording transactions, authorizing transactions, and approval.
B) authorizing transactions, approving transactions, and custody of assets.
C) authorizing transactions, recording transactions, and custody of assets.
D) authorizing transactions, inputting data, and outputting data.

Question

Quizplus · Accepted Answer

The three functions that should be segregated are authorizing transactions, recording transactions, and custody of assets. This ensures that no one individual or department has too much control or opportunity to manipulate transactions or assets. In option A, approval is not a separate function from authorizing transactions. In option B, approving transactions and custody of assets are combined, which could create a potential conflict of interest. Option D includes inputting and outputting data, which could fall under the recording transaction function.

The Three Types of Functions That Normally Should Be Segregated