Final answer:
The function that should not be assigned to the company's accounting department for effective internal control is the physical custody of assets. Segregation of duties is a key principle in internal control mechanisms to avoid conflicts of interest and potential fraud. Hence, the physical handling of assets should be the responsibility of a separate department.
Step-by-step explanation:
For effective internal control, the function not to be assigned to the company's accounting department is the physical custody of assets. Internal control is structured to provide reasonable assurance regarding the achievement of objectives related to operations, reporting, and compliance. One of the basic principles of internal control is the segregation of duties, which is intended to reduce the risk of errors and fraud.
Segregation of duties involves splitting responsibility for bookkeeping, custody of assets, and the authorization of transactions, making it much harder for one person to perpetrate and conceal a fraudulent act. Therefore, within an internal control framework, the accounting department should focus on recording transactions, maintaining financial records, and preparing financial reports. The custody of assets, like handling cash or managing inventory, should be under the care of another department to avoid conflicts of interest and potential fraud.
Thus, while the accounting department deals with financial data, employees outside the accounting function should be responsible for the physical handling of assets. This ensures that individuals who have access to the asset are not the same as those responsible for the accounting records. By following the principle of segregation of duties, companies can safeguard assets, enhance the accuracy and reliability of their accounting records, and increase the efficiency of operations.