Proper Segregation of Functional Responsibilities in an Effective System of Internal

question 38

Multiple Choice

Proper segregation of functional responsibilities in an effective system of internal control calls for separation of the functions of:

• A)authorization, execution, and payment.
• B)authorization, recording, and custody.
• C)custody, execution, and reporting.
• D)authorization, payment, and recording.

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Definitions:

Intentional Misstatement

Deliberate falsification or omission of information in financial records or statements.

Financial Reporting

The method by which declarations are created to reveal the financial condition of an organization to its managers, investors, and governmental bodies.

External Auditor

An independent third-party professional who examines the financial statements of a company to provide an opinion on their accuracy and compliance with accounting standards.

Cost-Plus Contracts

Agreements where a contractor is paid for all construction-related expenses plus a contracted profit.