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.
This is what you've been told:
- Emily Lopez deposits customer payments at the bank.
Which category of task is Emily currently fulfilling?
Answer:
- Custody of assets