requiring that an employee with no access to cash do the accounting is an example of which characteristic of internal control?
Answer:
The scenario mentioned, where an employee without access to cash is responsible for handling the accounting, is an example of the characteristic of segregation of duties in internal control.
Segregation of duties is a fundamental principle in internal control that aims to minimize the risk of fraud or errors by dividing key tasks and related responsibilities among different individuals. This means that no single person should have control over all aspects of a transaction or financial process. By segregating duties, organizations can create checks and balances, ensuring that no one person has exclusive control over the entire process.
In this case, by assigning the accounting tasks to an employee who has no access to cash, the organization is implementing the principle of segregation of duties. This ensures that the employee responsible for accounting cannot misappropriate cash or manipulate financial records without collusion with another employee who has access to cash.
Segregation of duties helps maintain the integrity of financial information, prevents conflicts of interest, and enhances the overall effectiveness of an organization’s internal control system. It serves as an important safeguard against fraud and errors, providing a system of checks and balances to ensure the accuracy and reliability of financial reporting.