From the course: Accounting Foundations: Internal Controls
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Segregation of duties and physical control
From the course: Accounting Foundations: Internal Controls
Segregation of duties and physical control
- The last time that you checked out at a supermarket, you saw two important control activities in action. First, you notice that the cashier handled the cash but that the cash register maintained the records of how much cash should be in the drawer. This is called separation of duties which can be summarized like this. Hands that touch the assets should not be allowed to also touch the record that tracks how much of that asset the company has. Second, you notice that the cash was kept physically locked up in the cash register. This is an example of the physical control of assets control activity. Control activities or control procedures are those policies and procedures that management has adopted to provide reasonable assurance that the company's established objectives would be met and that financial reports are accurate. Control activities fall into five categories. First, separation of duties; second, proper procedures…
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