Question

For strongest segregation of duties, the credit manager should never report to

A the IT department.
B the marketing department.
C the credit department.
D the accounting department.

Answer 1

The credit manager should not report to the accounting department in order to maintain proper segregation of duties and prevent conflicts of interest or the potential for fraud within the company.

Step-by-step explanation:

In the context of internal control and segregation of duties, the credit manager should not report directly to the accounting department.

To maintain proper segregation of duties, the credit manager—who has responsibilities relating to the extension of credit and assessing customer creditworthiness—should remain separate from the accounting function.

This is because the accounting department typically handles the recording of transactions, which may include the revenue generated from the credit extended.

If the credit manager were to report to the accounting department, it could compromise the internal controls designed to prevent errors or fraud.

The most appropriate answer is hence 'D the accounting department.' Reporting to the IT department or the marketing department would not typically interfere with the segregation of duties in the same way.

Option 'C the credit department' is illogical as the credit manager is, by definition, part of the credit department.