Skip to content

CS Professional · Internal and Forensic Audit · Internal Audit of Specific Functions

During an internal audit of the purchase function at Kaveri Textiles Ltd, the auditor finds that the same officer raises purchase requisitions, selects vendors and approves vendor payments. Which control weakness does this primarily indicate?

The situation shows absence of segregation of duties. One officer controls requisition, vendor selection and payment approval, so no independent review exists and the risk of error, collusion or fraud rises. Incompatible functions should be split among different people in the purchase cycle.

  1. AAbsence of segregation of dutiesCorrect
  2. BExcessive use of competitive bidding
  3. CLack of a goods return policy
  4. DOver-reliance on a single bank

Explanation

When one person initiates, selects the vendor and approves payment, no independent check exists, so errors or fraud can go unnoticed. Competitive bidding is a strength, not a weakness. The other options do not relate to the facts described.

Did you get it right without looking?

One question tells you little. A timed set on Internal Audit of Specific Functions shows your real accuracy, how long you take and where you lose marks.

Practise Internal Audit of Specific FunctionsFree diagnostic mock

More Internal Audit of Specific Functions questions