Question

Omar is a general manager at FRD Corporation. He recently attempted to reorganize FRD from three departments of ten people each to six departments of five people each. Which purpose of internal control is most likely to be impacted by the change?

Answer 1

Omar's reorganization of FRD Corporation into smaller departments is likely to affect the segregation of duties aspect of internal control, which helps prevent errors and fraud by dividing responsibilities among different individuals.

Step-by-step explanation:

Omar, as a general manager of FRD Corporation, changing the organizational structure from three departments of ten people each to six departments of five people each is likely to impact the segregation of duties aspect of internal control. Segregation of duties is a fundamental component of internal control that helps to prevent errors and fraud by ensuring that no single individual has control over all aspects of a financial transaction.

By increasing the number of departments, Omar may have increased the level of oversight and review, thereby enhancing the effectiveness of this control. However, if not managed well, this can also lead to issues such as confusion in responsibility, lack of clear authority, and potential inefficiencies in communication and processes.