In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records.

a) True

b) False

Question

Business

Nadia Dunlap

27 May, 05:25

In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records.

a) True

b) False

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Answers (1)

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Angelica Cobb · Answer 1

b) False

Explanation:

One of the key features of a good internal control system is the segregation of duties (SoD).

The principle of the segregation of duties entails that an individual is not allowed to initiate a transaction, review and approve the same transaction. In other words, a good internal control system would not allow an individual carry out all processes for a transaction from initiation, to authorization to approval to recording.

A system in which these responsibilities are shared mitigates against the risk of fraud and error.

Hence, in a good system of internal control, the person who initiates a transaction should be NOT be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records

In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records.a) Trueb) False

In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records.

a) True

b) False