ExpertEasy2 marksMultiple Choice
Syllabus C: Business functions, regulation and technologySyllabus CInternal ControlsFraud Prevention
ACCA · Question 13 · Syllabus C: Business functions, regulation and technology
Section A
PayStream is a fully automated fintech company. To prevent internal fraud, the system is configured so that the employee who sets up a new vendor account in the database cannot be the same employee who authorizes payments to that vendor. Which fundamental internal control principle is PayStream applying?
Section A
PayStream is a fully automated fintech company. To prevent internal fraud, the system is configured so that the employee who sets up a new vendor account in the database cannot be the same employee who authorizes payments to that vendor. Which fundamental internal control principle is PayStream applying?
Answer options:
A.
Physical controls
B.
Segregation of duties
C.
Arithmetic and accounting controls
D.
Management controls
How to approach this question
Identify that the task is split between two different people to prevent one person from committing and concealing fraud. This is segregation of duties.
Full Answer
B.Segregation of duties✓ Correct
Segregation of duties (or separation of duties) is a key internal control concept. It requires that different individuals be assigned responsibility for different elements of related activities, particularly authorizing transactions, recording transactions, and maintaining custody of assets. This prevents a single person from creating a fake vendor and paying themselves.
Common mistakes
Selecting 'Management controls' because it sounds authoritative. Segregation of duties is a specific, foundational control activity.
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