An employee who makes a sale, ships the goods, and bills the customer violates which control activity?

Question

Quizplus · Accepted Answer

Segregation of duties is a key internal control activity that separates incompatible responsibilities, such as the ability to make sales, ship goods, and bill customers. By combining these functions, the employee has the potential to carry out fraudulent activities, such as billing for goods that were never shipped or pocketing payment from customers. This violation could lead to a loss of revenue and incorrect financial reporting. Authorization of transactions and activities is related to ensuring that all transactions have appropriate approval before they are carried out. Documentation ensures that all financial transactions and activities are appropriately documented and recorded. Human resource controls are related to ensuring that employees are appropriately vetted, trained, and evaluated.

An Employee Who Makes a Sale, Ships the Goods, and Bills