Final answer:
The internal control principle designed to prevent one individual from both committing and concealing errors or fraud is known as segregation of duties. It plays a crucial role in bureaucratic systems alongside hierarchy of authority and clear division of labor.
Step-by-step explanation:
The internal control principle related to assigning responsibilities so that one employee cannot make a mistake or commit a dishonest act without someone else discovering it is referred to as segregation of duties. This principle is essential in any bureaucratic system to ensure that tasks and responsibilities are divided among multiple people, preventing any single individual from having the power to both perpetrate and conceal errors or fraud. The hierarchy of authority within a bureaucracy establishes a clear chain of command, while a clear division of labor ensures that specialized tasks are assigned to different individuals or departments.
However, these principles can sometimes come into conflict. For instance, during high-pressure situations where quick decision-making is needed, having a single person in charge might be more efficient, reducing transaction costs but possibly increasing the risk of misconduct not being detected due to the concentration of power.