Final answer:
Compensating controls are measures used to reduce risks when a primary control cannot be implemented, and segregation of duties is a compensating control that splits responsibilities among individuals to mitigate risk.
Step-by-step explanation:
The term segregation of duties is considered a compensating control in the context of internal controls within an organization. This term refers to the practice of dividing tasks and responsibilities among different people to reduce the risk of error or inappropriate actions. For instance, in financial accounting, one employee may be responsible for recording transactions while another oversees the reporting process, ensuring that no single person has complete control over all aspects of a financial operation. The segregation of duties is a foundational element of internal control systems aiming to prevent fraud and ensure accuracy and reliability in financial reporting.