Question

Segregation of employee duties as a control method, no matter whether you use manual systems or ERP systems such as SAP, is a strong control unless:

A. other controls are not in place.

B. there is collusion between the employees involved.

C. a computerized accounting information system is involved in the processing.

D. general control, such as system backup are not in place.

E. All of the above.

Answer 1

Segregation of duties means allocation different duties to different employees so that there would be less chance of error\mistake because of awareness of their own work (like what to do not to do). It will help in catching errors by some person done by other person. Also, segregation of duties will help preventing overriding of others work as well as interference of others work. Suppose a person has given duty to maintain store books then he would be responsible for that only. He would not have any concern with sales book of accounts. Also, if error\fraud catches and scope or area of error\fraud also found then responsible person can be caught.

A. Segregation of duties would be insufficient in case of other controls are not in place. E.g. if different persons are appointed to do different department accounting then reconciliation is necessary to check that all records are in line with each other.

B.If there is collusion between employees, then obviously it is difficult to put control measure because they would cheat in all together.

C. Computerized accounting system is required to get reports quickly otherwise it is easy to deceive any transaction.

D. Must require thing is backup because if someone deletes data knowingly or data becomes corrupt due to any reason then back up is needed.

Conclusion: Option E. All of above