Question

one of the most important control activities is segregation of duties? which functions should an organization keep separate? and why?

Answer 1

An efficient internal control system must segregate the duties of different individuals for controlling the business activities effectively. Segregation of duty is also helpful to meet out the due date and timeliness by dividing/allotting the job to different individual. Even it also helps to improve the security against embezzlement, fraud, and other financial errors in normal course of business.

Therefore, the responsibilities and various functions of different individuals must be segregated for safeguarding the assets and resources of the organisation. This is required in order to maintain control & operation of different departments and to maintain transparency in business operations.

Finally, we can conclude that the responsibility of managing accounting records must be different from the person who is responsible to execute the financial transaction. It should be segregated in order to safeguard the assets of the organisation from embezzlement, fraud, and other financial errors of accounting records that may be possible in the absence of segregation of duties.