Question

Which of the following is an accurate statement regarding control activities?

A) As the level of complexity of IT systems increases, the separation of duties often becomes blurred.
B) Segregation of duties would be violated if the same person authorizes the payment of a vendor's invoice and also approves the disbursement of funds to pay the bill.
C) The most important type of protective measure for safeguarding assets and records is the us of physical precautions.
D) all of the above

Answer 1

The accurate statement regarding control activities is that segregation of duties would be violated if the same person is responsible for both authorizing payments and disbursing funds for those payments (Option B).

Step-by-step explanation:

The correct answer to the student's question is B) Segregation of duties would be violated if the same person authorizes the payment of a vendor's invoice and also approves the disbursement of funds to pay the bill.

Control activities are essential in risk management and are part of an entity's internal control system. Segregation of duties is a key control activity where different individuals are responsible for different parts of a process to prevent fraudulent activities and to minimize errors. Therefore, if one person has the authority to both authorize payments and disburse funds, control activities are compromised as this increases the risk of fraud and errors.

Option A is not accurate because the complexity of IT systems does not necessarily blur the separation of duties. This aspect of internal controls should be maintained regardless of system complexity. Option C is also not accurate because physical precautions are only one type of protective measure and not necessarily the most important, as a mix of detective, preventative, and corrective controls are all integral to safeguarding assets.