Skip to content

ACCA Strategic Professional · Strategic Business Leader · Management and internal control systems

Halvorsen Logistics has a finance clerk who also approves supplier invoices, raises payments and reconciles the bank account. The audit committee is concerned about fraud risk. Which control weakness most directly explains the opportunity for fraud in this case?

The weakness is lack of segregation of duties. One clerk approves invoices, raises payments and reconciles the bank, so they can commit and conceal fraud without anyone else checking. Separating authorisation, processing and reconciliation removes that opportunity.

  1. ALack of segregation of dutiesCorrect
  2. BAbsence of a written code of conduct
  3. CInsufficient external audit fees
  4. DOver-reliance on budgetary control

Explanation

One person controls authorisation, execution and reconciliation, so errors or theft can be concealed. This is a failure of segregation of duties. A code of conduct affects attitude, not the structural opportunity to commit and hide fraud.

Did you get it right without looking?

One question tells you little. A timed set on Management and internal control systems shows your real accuracy, how long you take and where you lose marks.

Practise Management and internal control systemsFree diagnostic mock

More Management and internal control systems questions