Of the following control activities, which is the MOST effective for minimizing the possibility of fraudulent activity?
A) Bonding of employees.
B) Segregation of duties.
C) Rotation of assignments.
D) Enforced vacations.

Question

Quizplus · Accepted Answer

Segregation of duties is the most effective control activity for minimizing the possibility of fraudulent activities. It involves dividing responsibilities among different roles to ensure that no single person has too much control over a given process. This reduces the risk of fraudulent activities since it would require collusion between multiple individuals to carry out a fraudulent act. Bonding of employees helps guard against losses arising from the dishonest acts of employees, but it does not prevent the occurrence of such acts. Rotation of assignments decreases the risk of fraudulent activities by making it difficult for an individual to develop a scheme over a prolonged period of time. Enforced vacations ensure that employees take time off, but they do not necessarily prevent fraudulent activities.

Of the Following Control Activities, Which Is the MOST Effective