Segregation of Duties
Lesson:
Firms often have workers wearing multiple hats.
This can be dangerous, because when one person does many things, he may be able to hide undesirable behavior, like theft.
For this reason, well-run firms try to segregate certain tasks so that no individual can perform more than one task.
The most commonly suggested to segregate are:
- Custody of Assets
- Authorization of Transactions
- Recording of Transactions
- Reconciliation of existing assets to recorded amounts
A client is trying to provide more work to an employee, but he wants to ensure that a segregation of duties is maintained.
You've been briefed with the following facts:
- Margaret Lopez collects cash payments from customers at the retail register each day.
Which category of task is Margaret currently fulfilling?
Answer:
- Custody of assets