An internal auditor is planning an operational audit of the accounts payable function. Which of the following best mitigates the risk of the organization being a victim of disbursement fraud by employees?
An internal auditor is planning an operational audit of the accounts payable function. Which of the following best mitigates the risk of the organization being a victim of disbursement fraud by employees?
The best mitigation strategy for preventing disbursement fraud by employees is to ensure proper segregation of duties. Specifically, the accounts payable function should be properly segregated from the cash custody function. This segregation ensures that no single individual has control over both the recording and the custody of cash. By dividing these responsibilities among different employees, the organization reduces the risk of fraud, as it would require collusion between multiple individuals for fraudulent activities to occur successfully.
Authorization, recording and custody principle. Recording is payable function and cash is custody of asset.
Why D? Disbursement is not just related to cash. I think C is the best answer