Which of the following would be the best protection for an entity that wishes to prevent the 'lapping' of trade accounts receivable?

Question

Quizplus · Accepted Answer

Having customers send payments directly to the entity's bank would prevent lapping of trade accounts receivable as the payments would go directly to the entity's account without passing through any employee first. This reduces the risk of employees intercepting cheques and covering up shortfalls in receivables. Option A would not prevent lapping as cheques made payable to the entity could still be intercepted by an employee. Option C would be a good segregation of duties practice but would not prevent lapping on its own. Option D is not a recommended practice as it concentrates responsibility for cash receipts in one individual, increasing the risk of fraud.

Which of the Following Would Be the Best Protection for an Entity