Which control best demonstrates segregation of duties?
Correct answer: C. Different employees authorize, record and handle transactions
- A. One employee authorizes, records and safeguards cash
- B. The cashier prepares and approves the bank reconciliation
- C. Different employees authorize, record and handle transactions
- D. The accountant keeps all accounting documents personally
Explanation
Segregation of duties divides authorization, recording and custody among different people. This reduces the opportunity for one person to commit and conceal an error or fraud.
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Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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