ACCA Applied Knowledge · Business and Technology · Internal controls
Which of the following is the main purpose of segregation of duties within an internal control system?
The main purpose of segregation of duties is to reduce the risk that one person can both commit and conceal an error or fraud. By splitting authorisation, recording and custody among different staff, each person's work acts as a check on another's.
- ATo reduce the risk that a single person can both commit and conceal an error or fraudCorrect
- BTo ensure that all employees are paid at the same rate
- CTo remove the need for any management review of transactions
- DTo speed up processing by letting one person complete a whole transaction
Explanation
Segregation of duties divides key tasks such as authorising, recording and custody of assets among different people. This means one person cannot easily commit and hide an error or fraud. It does not remove the need for management review and usually slows rather than speeds processing.
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