Which of the following controls would be most useful to prevent an employee from using the organization's funds for inappropriate expenditures and falsifying financial records to conceal the fraud?
A.
Segregating duties in the payroll processes.
B.
Confirming receipt of goods or services.
C.
Performing background checks on newly hired employees.
Requiring management approval for expenses is an effective control to prevent inappropriate use of organizational funds and falsification of financial records. This control ensures that all expenditures are reviewed and approved by a higher authority, providing a check against potential misuse of funds. It helps in verifying the legitimacy and necessity of expenses, thereby reducing the risk of fraudulent activities by employees.
The Institute of Internal Auditors (IIA) Standards and Practice Advisories.
COSO Internal Control – Integrated Framework.
"Internal Auditing: Assurance & Advisory Services" by IIA, Chapter on Expense Management and Approval Controls.
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