Final answer:
A company's cash custody function should be separated from the related cash recordkeeping function to minimize opportunities for misappropriations of cash, establish accountability for cash, and physically safeguard cash.
Step-by-step explanation:
A company's cash custody function should be separated from the related cash recordkeeping function in order to minimize opportunities for misappropriations of cash.
By separating these two functions, the company can establish a system of checks and balances to ensure accountability for cash. This separation helps prevent a situation where the same person who handles cash receipts also records those receipts, reducing the potential for fraud.
Furthermore, physically safeguarding cash is another reason to separate the cash custody function from the cash recordkeeping function. This separation ensures that there are different layers of control and reduces the chances of theft or misplacement of cash.