Final answer:
Separating shipping and billing functions is a measure to reduce the threat of fraud by implementing a system of checks and balances in a business's internal controls.
Step-by-step explanation:
Separating the shipping and billing functions is primarily designed to reduce the threat of fraud. This segregation of duties is a key principle in internal control procedures that helps in preventing errors or irregularities, either intentional or unintentional. By ensuring that no single individual has control over all aspects of any financial transaction, it creates a system of checks and balances.
In practice, separating these functions means that the person who is responsible for the billing process should not be the same person handling the shipping duties. This way, it reduces the risk that an employee could manipulate the records for personal gain, and if discrepancies occur, they are more likely to be detected during reconciliation processes.