Question

One of the most critical controls to prevent theft of inventory purchased is to:

A. Require authorization of the purchase requisition.
B. Segregate inventory custody from inventory record keeping.
C. Compare the purchase order, receiving report, and invoice.
D. Segregate the authorization of purchases from the inventory record keeping.

Answer 1

One of the most critical controls to prevent theft of inventory purchased is to segregate inventory custody from inventory record keeping.

Step-by-step explanation:

One of the most critical controls to prevent theft of inventory purchased is to segregate inventory custody from inventory record keeping. This means that the responsibilities for handling and recording inventory should be assigned to different individuals or departments, reducing the risk of collusion or tampering with records.

For example, if the person responsible for custodial duties also has access to inventory records, they may be able to manipulate the records to cover up theft. By separating these roles, it becomes much more difficult for an employee to steal inventory without detection.

Some other controls mentioned in the options, such as requiring authorization of the purchase requisition or comparing purchase documents, are also important but may not directly address the risk of theft. Authorization and documentation controls help prevent errors or unauthorized purchases, but separating custody and record keeping specifically targets the prevention of inventory theft.