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    Question

    During an audit, the auditor notices that a single

    person in a company is responsible for authorizing transactions, maintaining records, and custody of assets. What is the likely implication of this observation?
    A Strong internal controls Correct Answer Incorrect Answer
    B Segregation of duties exists Correct Answer Incorrect Answer
    C High risk of error or fraud Correct Answer Incorrect Answer
    D No impact on audit Correct Answer Incorrect Answer

    Solution

    Lack of segregation of duties is a major internal control weakness, increasing risk of both errors and frauds. Proper internal control requires duties to be divided among different individuals.

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