ACCA Applied Knowledge · Business and Technology · Internal controls
A retailer requires that the employee who orders goods is different from the employee who receives them and the employee who authorises payment to suppliers. Which type of control is this?
This is segregation of duties. Dividing ordering, receiving and payment authorisation among different employees means no single person controls a whole transaction, which reduces the opportunity for fraud or undetected error. It is not a physical or arithmetical control.
- ASegregation of dutiesCorrect
- BPhysical access control
- CArithmetical and accounting control
Explanation
Splitting ordering, receiving and payment authorisation across different people is segregation of duties, reducing the chance that one person can commit and conceal fraud or error. Physical controls restrict access to assets, and arithmetical controls check accuracy of records, such as reconciliations.
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