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ACCA Applied Knowledge · Business and Technology · Financial systems and technology

A company's purchasing system allows the same employee to raise a purchase order, record the goods received and approve the supplier's invoice for payment. Which control weakness does this primarily represent?

The weakness is a lack of segregation of duties. One employee controls ordering, goods receipt and invoice approval, so fraud or error could pass undetected because no independent person checks any stage of the purchasing cycle.

  1. ALack of segregation of duties, increasing the risk of fraudulent or erroneous paymentsCorrect
  2. BLack of physical access controls over the stores
  3. CAbsence of a back-up procedure for the ledger
  4. DFailure to use pre-numbered documents

Explanation

One person controls ordering, receipt and payment approval, so a fictitious or inflated purchase could be processed without anyone else checking it. This is a segregation of duties failure. The other options are separate controls not described in the scenario.

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