Question

Which of the following illustrates the internal control procedure—separation of duties? A. The invoices and other documents must be pre-numbered. B. The company separates the custody of assets from accounting. C. Electronic devices must be installed to reduce theft. D. External auditors will monitor internal controls.

Answer 1

Answer: Option B  

Explanation: Separation of duties refers to the process under which the organisation sets the duties of two people to complete a particular task. This is seen as an internal control which is done with the objective of prevention of fraud.

Thus, in the option B the company is separating the custody of assets from accounting and giving it to some other department also this will result to double monitoring of transactions.

Hence from the above we can conclude that the correct option is B.