Final answer:
The three functions that should be segregated to promote internal control are authorizing transactions, recording transactions, and custody of assets to minimize risks of errors or fraud in a business setup.
Step-by-step explanation:
Within the internal control systems of a business, it is essential to segregate duties to minimize the risks of errors or fraud. This segregation involves three key types of functions: authorizing transactions, recording transactions, and custody of assets. Separating these functions ensures that no single individual has control over all aspects of a financial transaction, which enhances the checks and balances within the company.
Authorizing transactions is about giving official permission to conduct a transaction. Once a transaction is authorized, a separate individual is responsible for recording it in the company's books to account for the financial impact. Lastly, custody of assets involves the physical possession or direct management of the company's assets. By ensuring these roles are carried out by different individuals or departments, it is much more difficult for a single person to perpetrate and conceal inappropriate or fraudulent activities.