ACCA Applied Knowledge · Business and Technology · Internal controls
A warehouse manager at Kestrel Ltd is responsible for authorising purchases of stock, receiving the goods and also maintaining the inventory records. Which internal control principle is MOST directly breached?
Segregation of duties is breached, because one person authorises purchases, has custody of the goods and keeps the records. Separating authorisation, custody and recording means no single person can both commit and conceal an error or fraud without collusion.
- ASegregation of dutiesCorrect
- BPhysical access control
- CArithmetical and accounting checks
- DSupervision of junior staff
Explanation
Authorisation, custody of assets and record keeping should be performed by different people. Combining them allows one person to commit and conceal errors or fraud. Physical controls and supervision are different control types and are not the main issue described.
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