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8 December, 18:08

In a good system of internal control, the person who initiates a transaction should be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records.

a) True

b) False

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Answers (1)
  1. 8 December, 19:52
    0
    b) False

    Explanation:

    One of the key features of a good internal control system is the segregation of duties (SoD).

    The principle of the segregation of duties entails that an individual is not allowed to initiate a transaction, review and approve the same transaction. In other words, a good internal control system would not allow an individual carry out all processes for a transaction from initiation, to authorization to approval to recording.

    A system in which these responsibilities are shared mitigates against the risk of fraud and error.

    Hence, in a good system of internal control, the person who initiates a transaction should be NOT be allowed to effectively control the processing of the transaction through its final inclusion in the accounting records
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