ACCA Applied Knowledge · Business and Technology · The relationship between accounting and other business functions
A company's finance director proposes that the same member of staff should authorise supplier payments, prepare the payments in the bank system and reconcile the bank account, to speed up processing. Which statement best explains the main weakness of this proposal from the perspective of the finance function's control role?
The proposal breaches segregation of duties. When one person authorises payments, processes them and reconciles the bank, nobody independently checks their work, so errors or fraud could go undetected. The finance function's control role requires these tasks to be split between different people.
- AIt would increase the volume of statutory disclosures required
- BIt breaches the principle of segregation of duties, increasing the risk of undetected error or fraudCorrect
- CIt would prevent the budget from being prepared on time
- DIt would remove the need for any external audit
Explanation
Segregating authorisation, custody or processing, and reconciliation means one person cannot both commit and conceal errors or fraud. Combining them removes this check. It does not affect disclosures or budgeting, and external audit would still be required.
Did you get it right without looking?
One question tells you little. A timed set on The relationship between accounting and other business functions shows your real accuracy, how long you take and where you lose marks.
More The relationship between accounting and other business functions questions
- Karan Ltd's IT department has installed a new integrated enterprise resource planning (ERP) system. When the sales team records a customer o…
- Meridian plc's finance director wants the IT function to ensure that only authorised accounts staff can post journals, and that each posting…
- Which activity is normally part of the treasury role rather than the financial reporting role in a larger organisation?
- Which of the following best describes how the finance function supports the organisation's other functions such as marketing and operations?
- Which of the following is a typical treasury management responsibility rather than a financial accounting responsibility?
- A manufacturer adopts a just-in-time (JIT) purchasing approach. Which of the following is the most likely consequence for the purchasing fun…