Business Ratios Question:
Define the separation of duties?
Answer:
The separation of duties is one of several steps to improve the internal control of an organization's assets. For example, the internal control of cash is improved if the money handling duties are separated from the record keeping duties. By separating these duties the likelihood of theft is reduced because it will now require two dishonest people working together to admit to each other that they are dishonest, plan the theft, and to then carry out the theft. One person will have to remove the cash and the other person will have to falsify the records.
Without the separation of duties, the theft of cash is easier. One dishonest person can steal the money and enter a fictitious amount into the records-thereby concealing the theft.
Another step in improving internal control over cash is to use a cash register, issue receipts, and have two people present when cash is handled.
Without the separation of duties, the theft of cash is easier. One dishonest person can steal the money and enter a fictitious amount into the records-thereby concealing the theft.
Another step in improving internal control over cash is to use a cash register, issue receipts, and have two people present when cash is handled.
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