Final answer:
The separation of duties in business can be compromised through collusion, when two or more individuals collaborate to circumvent internal control systems designed to prevent fraud.
Step-by-step explanation:
The separation of duties and approvals can be violated by resorting to collusion.
In the context of internal control systems within businesses, separation of duties is a key concept that prevents fraud and unauthorized transaction by dividing responsibilities among different individuals. It is designed to prevent conflicts of interest and ensures that no single individual has control over all aspects of a financial transaction. However, separation of duties can be compromised if two or more individuals work together inappropriately to circumvent these controls, which is known as collusion.
For example, in a situation where an employee responsible for issuing checks colludes with a vendor to create fraudulent expenses, they can bypass controls set in place to prevent misuse of funds. This highlights the fundamental nature of separation of duties and the risks associated with not adhering to it strictly.