ExpertEasy2 marksMultiple Choice
ACCA · Question 21 · Syllabus C: Business functions, regulation and technology
[Section A] In a company's payroll department, the employee who calculates the monthly wages is also the only person authorized to approve the final bank transfers to employees' accounts. Which fundamental internal control principle is being violated here?
[Section A] In a company's payroll department, the employee who calculates the monthly wages is also the only person authorized to approve the final bank transfers to employees' accounts. Which fundamental internal control principle is being violated here?
Answer options:
A.
Physical controls
B.
Segregation of duties
C.
Information processing controls
D.
Human resource controls
How to approach this question
Identify the risk: one person has too much power over a complete transaction cycle.
Full Answer
B.Segregation of duties✓ Correct
Segregation of duties is a primary internal control intended to prevent fraud and error. By ensuring that no single individual has control over all phases of a transaction (authorization, execution, custody, and recording), the company forces collusion to occur if fraud is to be committed.
Common mistakes
Confusing segregation of duties with authorization. While authorization is involved, the specific error is that the *same* person is doing both steps.
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