What is the concept behind separation of duties in establishing internal controls?
A)The company's financial accountant should not share information with the company's tax accountant.
B)Duties of middle-level managers should be clearly separated from those of top executives.
C)Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

Question

Quizplus · Accepted Answer

Separation of duties is a fundamental concept in establishing internal controls. It means that critical functions should be assigned to different people to reduce the risk of error or fraud. By separating asset custody from record-keeping, employee fraud is less likely to occur as it creates a system of checks and balances. For example, an employee who has access to cash should not have access to the accounting system as it would allow them to create false entries to cover up their theft. Therefore, Option C is the best choice as it explains the concept of separation of duties in terms of asset access and accounting records.

What Is the Concept Behind Separation of Duties in Establishing