Final answer:
To safeguard the general ledger, separation of duties is necessary, such as dividing the tasks of transaction recording and reconciliation, and separating authorization from entry of transactions. Other control measures include regular audits, stringent access controls, and thorough documentation for each entry.
Step-by-step explanation:
To control against unauthorized entries to the general ledger (GL), several separation of duties is essential. One aspect involves splitting the responsibilities for recording transactions and the reconciliation process; this means that the person who records transactions should not be the same individual responsible for reconciling the GL. Another key separation is between those who authorize transactions and those who enter them into the GL, preventing any single person from completing a transaction independently. Additional control procedures include regular audits, strict access controls, and comprehensive documentation of all changes to the GL.
Control Procedures for the General Ledger
- Regular audits by internal or external auditors to check for discrepancies and ensure compliance with accounting standards.
- Access controls limiting who can enter or alter information in the GL to authorized personnel only, often enforced through user permissions in accounting software.
- Mandatory documentation for every entry, including supporting evidence and approval from authorized supervisory personnel.