CIA 592 II.15

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  • #227774
    Kevin Joe Ragadio
    Participant

    Hi Ms. Lynn,

    Good day.

    I have a tiny clarification on the correct answer. Isn’t this against the SOD because the custodial function and the approval function is being done by 1 employee?

    Thank you.

     

Viewing 4 replies - 1 through 4 (of 4 total)
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  • #227776
    Brian Hock
    HOCK international

    Hello, Kevin,

    Choice C is not a segregation of duties because the term physically inventory in this case is referring to the process of taking the inventory count. So, choice C is the process of reconciling how many we actually have with how many we think we have.

    But, since the question is asking about preventing theft, choice A will do a better job of preventing theft. Choice C will let us know how much was stolen.

    Does this help?

    Brian

    #227806
    Kevin Joe Ragadio
    Participant

    Hi Mr. Brian,

    Good day.

    I agree that choice A will do a better job of preventing theft than choice C, because choice C is just a detective measure. However, my issue in choice A is that if the person who has the custody of the assets also has the authority to approve the release of the assets, isn’t that against segregation of duties? That’s the reason why I did not choose option A and thought of choice C as the best option among the choices.

     

    #227816
    Lynn Roden
    HOCK international

    Hello Kevin Joe Ragadio,

    The “approval” this question is referring to is not the same as authorizing the employee to use the vehicle. That authorization would need to be done by the user’s supervisor. The custodian would not release the vehicle without the employee’s supervisor’s approval on some kind of document.

    However, the custodian would also need to sign the document to affirm that the vehicle had been released to the proper person as authorized by that employee’s supervisor. And when the vehicle was returned, the custodian would sign, probably the same document, to affirm that the vehicle had been returned.

    So there would be two approval signatures on a document authorizing the vehicle’s release: the approval of the employee’s supervisor and the approval of the custodian saying that the vehicle was released to the person who had been authorized to use it. And when it was returned, the custodian would probably sign the same form in a different place, indicating that the vehicle had been returned.

    The “approval” of the custodian is a delegated approval. The custodian has the authority to check vehicles in and out and sign a document saying the vehicle has been checked out or checked back in, because in order to do his or her job, the custodian must have the authority to make that determination. It does not constitute a segregation of duties problem.

    Of course, an internal control cannot guarantee that something unwanted will not occur. Two people could collude and get around the control. But that is the nature of internal controls.

    Does that help?

    Lynn

    #227827
    Kevin Joe Ragadio
    Participant

    Hi Ms. Lynn,

    Got it. Thank you so much.

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