Final answer:
The statement is False. The low number of types of transactions incurred by small firms does not make the segregation of duties impossible. It is often easier to establish a segregation of duties within small firms compared to larger organizations.
Step-by-step explanation:
The statement is False. The relatively low number of types of transactions incurred by small firms does not make the segregation of duties impossible. In fact, it is often easier to establish a segregation of duties within small firms compared to larger organizations. Segregation of duties refers to the practice of dividing critical tasks and responsibilities among multiple individuals to reduce the risk of fraud, error, or misuse of resources. While it may be more challenging for small firms to implement a complete segregation of duties due to limited staff, it is still possible to establish some level of segregation by assigning different people to handle different aspects of financial transactions.
For example, even in a small firm with only a few employees, the owner or manager could be responsible for approving transactions, while another employee could be responsible for recording and reconciling those transactions. This separation of duties helps to create a system of checks and balances to ensure accuracy and prevent any single individual from having complete control over financial activities.