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Match the Segregation of Duties for Investments with the Misstatement

Question 69

Matching

Match the segregation of duties for investments with the misstatement (due to error or fraud) it can help prevent.

Premises:
The initiation function is separate from the final approval function
The valuation-monitoring function is separate from the acquisition function
Custody of the securities is separate from accounting for the securities
The maintenance of the securities ledger is separate from that of the general ledger
Responses:
An individual can make fictitious transactions
An individual can improperly record securities values or not report the values to management
An individual can conceal any defalcation that would normally be detected by reconciliation of subsidiary records with general ledger control accounts
An individual can conceal a theft of securities

Correct Answer:

The initiation function is separate from the final approval function
The valuation-monitoring function is separate from the acquisition function
Custody of the securities is separate from accounting for the securities
The maintenance of the securities ledger is separate from that of the general ledger
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